FTAs as Applicable Law in WTO Dispute Settlement: Was the Appellate Body Wrong in Peru-Additional Duty (DS457)?

39 Pages Posted: 1 Dec 2016

See all articles by Gregory Shaffer

Gregory Shaffer

University of California, Irvine School of Law

L. Alan Winters

University of Sussex; IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

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Date Written: November 2016


There is a serious imbalance between the sclerosis of the political system of the World Trade Organization (WTO) and the automatic adoption of WTO Appellate Body judicial reports. The question is whether the WTO Appellate Body will recognize bilateral political agreements (such as under Free Trade Agreements, FTAs) that modify WTO obligations between two parties. In addressing this question, the Appellate Body decision in Peru-Additional Duty on Imports of Certain Agricultural Products is important. The decision addressed the availability of defenses under FTAs in WTO disputes, as well as under public international law generally. After critically assessing the decision, we set forth a series of judicial and political choices for addressing the interaction of WTO and FTA rules going forward. In particular, we contend that clear modifications of WTO commitments under an FTA should be recognized by WTO panels as a defense, but subject to the FTA itself complying with WTO requirements under GATT Article XXIV. The case is important not only for trade specialists, but generally for policymakers and scholars of global governance in a world of fragmented international treaties.

Keywords: WTO, FTAs, variable levies, fragmentation

Suggested Citation

Shaffer, Gregory C. and Winters, L. Alan Alan, FTAs as Applicable Law in WTO Dispute Settlement: Was the Appellate Body Wrong in Peru-Additional Duty (DS457)? (November 2016). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2016/65, Available at SSRN: https://ssrn.com/abstract=2877813 or http://dx.doi.org/10.2139/ssrn.2877813

Gregory C. Shaffer (Contact Author)

University of California, Irvine School of Law ( email )

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Irvine, CA 92612
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L. Alan Alan Winters

University of Sussex ( email )

Sussex House
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United Kingdom

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072

Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

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