Principle of Non-Discrimination in GSP Schemes: Revisiting EC-Tariff Preferences

Abstract

Non-discrimination, a central pillar of the General Agreement on Tariffs and Trade (GATT) and World Trade Organisation (WTO), is on the wane when it comes to the operation of preferential market access. This issue of wide-scale discrimination was brought to the limelight through EC-Tariff Preferences case. The Appellate Body, by interpreting the term ‘non-discriminatory' as authorising differential treatment among developing countries, overturned the more logical interpretation of the term by the panel. The panel interpreted 'non-discriminatory as requiring identical tariff preferences under Generalised Schemes of Preferences (GSP schemes) to all developing countries without differentiation, except for the more favourable treatment for the least developed countries (LDCs). This article argues that the appellate body' appeared to have upheld the view held by developed countries that GSP, being merely a 'gift' to developing countries, depends on the preference-giving countries' political will. On the other hand, the panel's interpretation was more in favour of developing countries' interest since it recognised their legal entitlement to equal preferential treatment with other developing countries and acknowledged the special situation of LDCs requiring more favourable treatment.