Foe or Friend of GATT Article XXIV: Diversity in Trade Remedy Rules

While the WTO Member countries continue to increase their FTAarrangements with divergent frameworks, they have begun to adoptmodified WTO trade remedy systems in FTAs. Although the contentand degree of these modified systems may not be significantyet, they still set very important precedents, or ‘seeds’,for ‘rule diversification’ in the world tradingsystem. Such modification typically aims to further liberalizemutual trade between FTA parties and thereby contribute to afreer world trading system. However, such rule diversificationappears to be inconsistent with the mandate of Article XXIVof GATT by worsening economically inferior trade diversion.The reinterpretation of the legal obligations in Article XXIVcommensurate with economically more reasonable structures impliesthat trade remedy rules in FTAs should be applied on a non-discriminatorybasis. Moreover, an FTA safeguard measure must precede a WTOsafeguard measure to ensure optimal competitive conditions amongtrading partners. In sum, the right channel for improving thecurrent WTO trade remedy systems is not the FTA forums but theWTO negotiation.