Unilateral modification and withdrawal of WTO concessions and commitments

Abstract

International trade presupposes access to the domestic markets of other states. In order to ensure access to foreign markets, WTO members negotiate and bind tariffs for goods and market access commitments for services. The legal consequence of binding these commitments is that WTO members may not raise market access barriers beyond the bound level. Yet, consolidating the commitments does not tie the hands of members, as one might expect: Several WTO provisions permit members to modify or withdraw their commitments without violating their WTO obligations. While modification is primarily based on renegotiation, the prominent aspect of the provision is that a member wishing to deviate from its commitments may do so, even if it is unable to secure permission from members affected by the modification. This aspect, which I refer to as ‘unilateral modification’ is the topic of the thesis. <br>The thesis examines unilateral modification of WTO commitments from different perspectives and different methods: Normative law, dogmatic legal interpretation, comparative methods and the political economy of law. <br>After introducing the topic, the thesis examines, from a de lege ferenda perspective, if and to what degree WTO members should be allowed to unilaterally modify their commitments. Several principles do not support unilateral modifications, while others do. Some principles do not per se determine whether unilateral modifications should be permitted, but govern how unilateral modifications should be done and at what price such modification should come. <br>Having established the object and purpose of permitting unilateral modifications, the main provisions condoning such behavior, GATT Art. XXVIII and GATS Art. XXI, are subjected to dogmatic legal interpretation as provided by the WTO Dispute Settlement Understanding Art. 3.2. The interpretation reveals that unilateral modification is an absolute right, which cannot be curtailed. However, certain procedural requirements must be met before a member unilaterally modifies its commitments, and unilateral modification does not come without a price – certain affected members are given a right to retaliate. <br>Retaliation is not only a remedy for the intra-contractual permissible behavior of unilateral modification; it is also a remedy against breach of WTO obligations. This raises questions on the relationship between unilateral modification and WTO dispute settlement. The thesis looks at similarities and differences between the remedies and consequences thereof, in addition to issues of non-violation complaints and whether a WTO member may unilaterally modify a commitment in a disputed setting. <br>The existence of provisions allowing WTO members to unilaterally modify their commitments has given rise to questions as to whether WTO obligations, in general, and WTO commitments, in particular, are legally binding. The thesis examines the unilateral modification provisions in light of a debate between ‘rebalancing’ and ‘compliance’ schools of thought, concerning the object and purpose of enforcement of WTO rules and the legal bindingness of dispute settlement reports (and ultimately WTO rules). It is argued that WTO members are not only bound by WTO obligations but also by their given commitments. Rather than diminishing the binding nature of commitments, the provisions allowing unilateral modification confirm their binding nature.