Article XXIV (Territorial Application - Frontier Traffic - Customs Unions and Free Trade Areas)

Articles XXIV:4-8 (Customs unions and free trade areas)

 India - Iron and Steel Products (Panel)  (In the context of determining whether the measure
at issue constitutes a safeguard measure under GATT Article XIX and the Safeguards
Agreement, Panel examined India's assertion that the measure at issue suspended its
obligations under GATT Articles XXIV:4, XXIV:8 and XXIV:12, with respect to the free trade
agreements that it concluded with Korea and Japan; Panel observed that Article XXIV
contains rules applicable to free trade areas of which WTO Members are part, and
considered that any obligations that India may have under the FTAs to apply a particular
duty or refrain from imposing a particular measure would not arise from the GATT 1994 but
from the FTA in question; more specifically, found that Articles XXIV:4 and XXIV:8 do not
contain a positive obligation, and, while Article XXIV:12 does, there is no indication here that
the measure resulted in regional or local authorities engaging in any GATT-inconsistent
conduct, such that the obligations did not arise here; thus, concluded that India did not
demonstrate that the measure at issue resulted in a suspension of its obligations under
GATT Article XXIV. See paras. 7.64-73)

 Indonesia - Iron or Steel Products (Panel)  (Found no basis for Indonesia's assertion that GATT
Article XXIV precluded its authorities from raising tariffs on these imports and therefore the
specific duty suspended the GATT exception under Article XXIV; instead, concluded that
preferential tariff commitments are obligations assumed under the respective free trade
agreements and not the WTO Agreement. See paras. 7.19-20)

 Peru - Agricultural Products (AB) (In considering whether the Guatemala-Peru FTA and ILC
Articles 20 and 45 could be considered "relevant" to the interpretation of Agriculture
Agreement Article 4.2 and GATT Article II:1(b), within the meaning of VCLT Article 31(3)(c),
or a "subsequent agreement 'regarding the interpretation'" of these provisions under VCLT
Article 31(3)(a), stated that, even assuming that the FTA allows Peru to maintain a WTO-
inconsistent PRS, it was not convinced that such alleged modification would be subject to
VCLT Article 41, given that the WTO agreements contain specific provisions addressing
amendments, waivers or exceptions for regional trade agreements which prevail over the
general provisions of the VCLT, something that is particularly true in the case of FTAs in that
GATT Article XXIV specifically permits departures from certain WTO rules in FTAs; here, it
pointed out that Article XXIV conditions such departures on the fulfilment of the rule that
the level of duties and other regulations shall not be higher or more restrictive than those
applicable prior to the formation of the FTA; thus, considered that the proper routes to
assess whether an FTA provision is nevertheless consistent with the covered agreements are
WTO provisions permitting the formation of regional trade agreements, namely GATT Article
XXIV, the Enabling Clause and GATS Article V; here, examining Article XXIV, particularly
paragraph 4, opined that the references in paragraph 4 to facilitating trade and closer
integration are not consistent with the interpretation of Article XXIV as a broad defence for
measures in FTAs that roll back Members' rights and obligations under the WTO covered
agreements; in any event, recalled that Peru did not invoke Article XXIV as a justification and
the parties agreed that the FTA had not entered into force, meaning that the FTA could not
benefit from the defence of Article XXIV, and also that it is unclear whether the FTA allows
Peru to maintain a WTO-inconsistent PRS, such that it did not have to consider whether the
PRS is consistent with the requirements set forth in Article XXIV; concluded, therefore, that
 the Panel did not err in declining to make findings as to whether the FTA modified the WTO
rights and obligations between Peru and Guatemala because the FTA was not in force.
See paras. 5.97-119)

 Peru - Agricultural Products (Panel)  (Referring to the FTA between Peru and Guatemala
signed in 2011, Peru asserted that a finding by the Panel that the PRS is not WTO-consistent
would be "an inconsistency between the FTA and the WTO agreements," because "the FTA
allows Peru to maintain the PRS"; that is, Peru argued that, as a result of the mutual
concessions that were negotiated, Guatemala agreed in paragraph 9 of Annex 2.3 to the FTA
that Peru could maintain its PRS; Peru referred to VCLT Article 41 in support of its argument
that "two States parties to a multilateral treaty may modify their obligations as between
themselves," and it also asserted that GATT Article XXIV demonstrates that Members may
modify their WTO rights by means of regional trade agreements; Panel considered that
Peru's assertion presupposes that the FTA provisions are legally binding on Guatemala and
Peru; but, here, it noted that it was undisputed that the FTA had not yet entered into force;
recalled its earlier discussion that a treaty that is signed, but which has not yet entered into
force, has limited legal effects, such that its provisions are not currently binding on the
parties; thus, Panel found it unnecessary to express an opinion on "whether the parties may,
through the FTA, modify between themselves their rights and obligations under the covered
agreement" or "whether there is a conflict of rules between the FTA and the covered
agreements and the consequences such a conflict would have." See paras. 7.24-29, 7.505-
528)

 Brazil - Tyres (Panel) (Found that "as of the time of the Panel's ruling, the operation of the
MERCOSUR exemption has not resulted in the measure being applied in a manner that
would constitute arbitrary or unjustifiable discrimination"; noted that the MERCOSUR
tribunal ruling was adopted as part of a trade liberalizing agreement among the MERCOSUR
member countries, with such agreements expressly recognized in GATT Article XXIV; said
that it did not "consider that it is contrary to the terms of Article XXIV:8(a) for us to take into
account, in our assessment of the measure under Article XX, the fact that the MERCOSUR
exemption was adopted as a result of Brazil's obligations under MERCOSUR"; noted that
Article XXIV:8(a) provides "some flexibility" to the members of the members of a customs
union "to maintain certain restrictive regulations of commerce." See paras. 7.264-289; Panel
exercised judicial economy in respect of the EC claims under Articles XIII:1and I:1 on Brazil's
MERCOSUR exemptions and Brazil's defence under Articles XXIV and XX(d) of GATT 1994.
See paras. 7.448-456)

 U.S. - Line Pipe Safeguards (AB)  (Because the U.S. acted inconsistently with the principle of
"parallelism" in excluding its NAFTA partners from the application of the line pipe safeguard
measure, the Appellate Body found it unnecessary to consider the discrimination claims and
the U.S. Article XXIV defense to the discrimination claims; therefore, Appellate Body
declared the Panel's findings under Article XXIV to be moot and of no legal effect. See  paras.
198-199)

 U.S. - Line Pipe Safeguards (Panel)  (Based on information submitted to the CRTA, concluded
that the U.S. had established a prima facie  case that NAFTA is in conformity with Article
XXIV:5(b) and (c), and with Article XXIV:8(b); therefore, the U.S. is entitled to rely on an
Article XXIV defense against Korea's claims under Articles I, XIII and XIX regarding the
exclusion of imports from Canada and Mexico from the scope of the line pipe measure; since
 exclusion of NAFTA members from the application of the measure would result in the
elimination of duties, the Panel suggested that, by its nature, the measure is "necessary" to
the formation of a free trade area; found that Article XXIV also serves as a defense to a claim
under Safeguards Agreement Article 2.2; on appeal, Appellate Body found it unnecessary to
address these issues and declared the Panel's finding "moot and as having no legal effect."
See paras. 7.127-163)

 Canada - Autos (Panel)  (Noting that Canada's duty exemption applies to countries outside
the NAFTA, and, in addition, does not apply to all  manufacturers from the U.S. and Mexico,
concluded that the measure does not provide for duty-free treatment of imports of products
from parties to a free-trade area and, therefore, Article XXIV does not provide a justification
for the inconsistency with Article I:1. See paras. 10.51-57)

 Argentina - Footwear Safeguards (AB) (Discussed in the context of findings on Safeguards

 Argentina - Footwear Safeguards (Panel)  (Discussed in the context of findings on Safeguards

 Turkey - Textiles (AB) (For an Article XXIV defense based on the existence of a customs
union, stated that a panel should first determine whether a "customs union," as defined in
Article XXIV:8, exists; then, it should determine whether the formation of a customs
union would be prevented without the inconsistent measure  (that is, whether the measure
is necessary  for the formation of a customs union);  here, concluded that the quantitative
restrictions are not necessary for the formation of the customs union, and therefore Article
XXIV does not justify the adoption of these restrictions. See paras. 42-63)

 Turkey - Textiles (Panel) (Stated that panels have jurisdiction to examine "any matters
'arising from' the application" of the relevant provisions of Article XXIV, which confirms that
a panel can examine the WTO-consistency of measures arising from agreements made
pursuant to Article XXIV; found it unnecessary to assess the compatibility of the Turkey-EC
customs union agreement itself with Article XXIV in order to address Turkey's import
restraints -- reversed on appeal; concluded that Turkey's import restraints are not justified
under Article XXIV. See paras. 9.87-192)

Article XXIV:12  (Shall take reasonable measures to ensure observance by the regional and local
governments and authorities)

 India - Iron and Steel Products (Panel)  (In the context of determining whether the measure
at issue constitutes a safeguard measure under GATT Article XIX and the Safeguards
Agreement, Panel examined India's assertion that the measure at issue suspended its
obligations under GATT Articles XXIV:4, XXIV:8 and XXIV:12, with respect to the free trade
agreements that it concluded with Korea and Japan; found that Articles XXIV:4 and XXIV:8 do
not contain a positive obligation, and, while Article XXIV:12 does, there is no indication here
that the measure resulted in regional or local authorities engaging in any GATT-inconsistent
conduct, such that the obligations did not arise here; thus, concluded that India did not
 demonstrate that the measure at issue resulted in a suspension of its obligations under
GATT Article XXIV. See paras. 7.64-73)

 EC - Customs Matters (Panel)  (Concluded that "irrespective of whether or not Article XXIV:12
of the GATT 1994 is applicable in the context of this dispute," the provision "does not
constitute an exception nor a derogation from the obligation of uniform administration in
Article X:3(a)" and therefore Article XXIV:12 "has no impact upon our examination of the
United States' claims under Article X:3(a) of the GATT 1994." See paras. 7.136-145)