© Springer-Verlag Berlin Heidelberg 2015Siniša Rodin and Tamara Perišin (eds.)Judicial Application of International Law in Southeast Europe10.1007/978-3-662-46384-0_3
Judicial Application of WTO Law in Southeast Europe
Faculty of Law, University of Zagreb, Zagreb, Croatia
Research for this paper was completed in June 2013.
This chapter deals with the application of the law of the World Trade Organization (WTO) in eight countries of Southeast Europe (SEE): Albania, Bosnia and Herzegovina, Croatia, Kosovo, Macedonia, Montenegro, Serbia and Slovenia. Five of these countries, Albania, Croatia, Macedonia, Montenegro and Slovenia, are WTO members1; two countries, Bosnia and Herzegovina and Serbia, have observer status and their accession is in progress; Kosovo has yet to start these processes. The WTO membership of Slovenia is specific since this country is an EU Member State so a large share of the competence in the field of WTO law is conferred on the EU and the status of WTO law is largely governed by EU law. The same is true for Croatia following the country’s accession to the EU on 1 July 2013, but this chapter entails research on the application for WTO law prior to EU accession.
The chapter has two main parts. The first deals with the effects that WTO law is aimed to produce in general, and within the EU legal order in particular. The effects of WTO law in the EU are taken as relevant because all SEE countries see their future there, so they might be willing to recognise such effects even before EU accession. The second part looks at the effects that WTO law has so far had in SEE countries. It shows that WTO law has only rarely been applied in SEE countries and that in most of them there has not been a single case where a national court has relied on WTO law or where parties have cited WTO law to support their claims. The concluding part looks at reasons for the poor application of WTO law in SEE.
2 WTO Law and Its Effect
It is well known that the WTO was established in 1995 as an umbrella organisation covering a large number of diverse agreements on trade in goods, services, intellectual property, dispute settlement, and trade policy reviews. All WTO members must be parties to all multilateral agreements which are covered by the WTO umbrella, but there is also a smaller number of plurilateral agreements which are optional.
The WTO is an international, not a supranational, organisation, so its treaties have the legal effect of general international law. The idea that WTO law should per se have direct effect in all its member states (similarly to the effect of EU law) was explicitly rejected during the Uruguay round, and, for example, the Panel in US—Sections 301–310 of the Trade Act of 1974 explicitly mentioned how neither the GATT nor any part of WTO law was ever interpreted as having direct effect.2 However, this Panel held:
[t]he fact that WTO institutions have not… construed any obligations as producing direct effect does not necessarily preclude that in the legal system of any given Member, following internal constitutional principles, some obligations will be found to give rights to individuals. [The Panel’s]… statement of fact does not prejudge any decisions by national courts on this issue.3
This means that the effect of WTO law in WTO members depends on their own constitutional principles, primarily on whether the country is monist or dualist.
Within the EU legal order, the European Court of Justice (ECJ) took very early on the position that the General Agreement on Tariffs and Trade (GATT) had no direct effect. In International Fruit Company, it considered that the characteristics of the GATT, primarily the ‘great flexibility of its provisions, in particular those conferring the possibility of derogation’ and the possibility to unilaterally suspend, withdraw or modify its concessions made it impossible for this agreement to have direct effect.4 Later, when the WTO was established, new litigants tried persuading the Court that this new legal system was such that its agreements should have direct effect within the EU. The Court rejected this possibility. In Portugal v Council, it held that ‘having regard to their nature and structure, the WTO agreements are not in principle among the rules in the light of which the Court is to review the legality of measures adopted by the Community institutions’ and that ‘by its nature, the Agreement establishing the World Trade Organisation, including the Annexes thereto, is not susceptible to being directly invoked in Community or Member State courts’.5
However, the Court did (both before and after the establishment of WTO law) allow for some narrow exceptions under which WTO law could be invoked by individuals and used to assess the validity of EC/EU law. These were situations where the EU measure expressly referred to precise provisions of WTO agreements (Fediol)6 or where the EU measure was intended to implement a particular WTO obligation (Nakajima).7 The Court has also allowed WTO law to have interpretative effect, so both European and national legislation must be interpreted in its light.8
3 Application of WTO Law in SEE
The analysis of the application of WTO law in eight SEE countries is based on national reports containing answers to a questionnaire inquiring about various aspects of WTO accession, the application of WTO law, and education in the field. These answers were provided by rapporteurs in charge of national reports to this book and by other contributors, who are all academics dealing with EU and international law issues, well acquainted with their country’s legal order, the functioning of national institutions, including the judiciary, and domestic legal education.9
3.1 Status and Availability of WTO Law in SEE
The first part of the questionnaire dealt with the status and availability of WTO law in SEE. The reports confirmed that all eight SEE countries covered by this research have a monistic understanding of the relationship between national and international law. The Constitutions of Albania,10 Croatia,11 Kosovo,12 Macedonia,13 Montenegro,14 Serbia15 and Slovenia16 expressly state that international agreements which have been properly ratified and published in the official journal are a part of the country’s internal legal order and that they enjoy priority over national laws. The Constitution of Bosnia and Herzegovina is silent on the legal status of international agreements in general,17 but its Article 2(2) expressly states that the European Convention on Human Rights (ECHR) is directly applicable and hierarchically superior to other national laws,18 and the Constitution’s Annex I lists some other agreements for the protection of fundamental rights which also appear to be self-executing.19 All this suggests that WTO treaties to which SEE countries are parties are also a part of the internal legal order of these countries (except perhaps in Bosnia and Herzegovina), and that they are hierarchically superior to national laws.
However, while formally there should be no problems in the application of WTO treaty texts, a practical problem derives from the fact that WTO law is mostly unavailable in the official languages of the SEE countries. The situation of Slovenia and Croatia is special in this respect, as the WTO Agreement and all of its annexes are available in their official languages through the EU database EUR-Lex.20 As regards other SEE countries which are not EU members, data collected through questionnaires reveals Macedonia is the only one which has translated the WTO Agreement with its annexes into Macedonian.21 In Croatia and Montenegro, there are official translations of the countries’ accession protocols with some schedules of concessions.22 In Serbia, a commercial database offers a translation of TRIPS into Serbian.23 The situation is even worse when it comes to WTO case law, as neither full cases nor even case excerpts are available in any of the SEE languages. Only the Macedonian rapporteurs reported that information on WTO law which includes excerpts from selected cases can be obtained in Macedonian through translations in certain books and textbooks.24
3.2 Attitude of SEE Countries’ Legislative and Executive Branches Towards WTO Law
The second part of the questionnaire inquired about the attitudes of the SEE countries’ legislative and executive branches towards WTO accession and WTO law. For all eight SEE countries covered by this survey, WTO accession was or is among the governments’ priorities. This is visible in various documents, most frequently from WTO working party reports containing official government statements.25
However, in SEE countries, WTO accession is not considered very important per se. Countries do not show great interest in what WTO rules have to offer in terms of trade liberalisation and benefits for imports and exports. These countries do not expect to achieve significant trade at the global level because the circle of their trading partners is relatively narrow. The lion’s share of SEE countries’ trade is within the region and with the EU,26 and these trade relations have been liberalised through special agreements going beyond WTO obligations. For example, all of the SEE countries (with the exception of Slovenia) are parties to the Central European Free Trade Agreement (CEFTA) which liberalises trade between them (and with Moldova).27 Furthermore, all of the SEE countries (except Slovenia which has had a Europe Agreement since 1996)28 have concluded Stabilisation and Association Agreements (SAA) with the EU.29 Croatia’s relations with the EU were regulated by an SAA until its EU membership, and currently the SAAs of Albania, Macedonia and Montenegro are in force, while Bosnia and Herzegovina and Serbia have interim agreements30 pending completion of the SAAs’ ratification process in all EU Member States. Kosovo is currently the only SAA country which has not yet concluded an SAA, but the first steps are being taken in that direction.31 Consequently, SEE countries have achieved significant trade liberalisation with their major trading partners through means other than WTO membership. CEFTA and the SAAs thus make WTO accession less important in terms of trade liberalisation benefits.
Nevertheless, for SEE countries, WTO accession was or is important for political reasons, especially since it is one of the prerequisites for EU membership. The political (rather than trade) dimension of WTO membership can be detected from the comments of Montenegrin officials where WTO accession is put in the broader political context of integration with non-trade related organisations, as heard, for example, in the statement that WTO accession is the “third most important integration process after the EU and NATO accession goals”.32
The consequence of this political rather than economic importance of WTO membership is that SEE countries will always want to appear to be acting in a WTO compatible manner, but they might not want to invest real effort into screening their rules for WTO noncompliance and removing WTO incompatible measures so as to achieve greater economic efficiency. In practice, this means that legislative acts might invoke WTO law,33 and government representatives may claim that certain parts of the legal system have been made compliant with WTO rules.34 However, WTO noncompliance is never mentioned, even for measures that remained in force from before WTO membership. One can guess that there are WTO incompatible measures in all SEE countries (as generally in any WTO member), but since there have been no challenges against these measures, they could remain in force indefinitely (see below Sect. 4).
3.3 Application of WTO Law by National Courts in SEE Countries
The third part of the questionnaire concerned the judicial application of WTO law in SEE. The survey showed that WTO law has almost never been applied by the courts of SEE. This is despite the fact that these countries have monist systems. However, there are some differences between the countries.
It seems that Croatian courts have been the most active in the region in applying WTO law, but the total number of decisions citing WTO law which are available online (through a commercial database35) barely reaches double figures. The most prominent case concerns a foreign law firm wanting to set up a branch in Croatia on the basis of the General Agreement on Trade in Services (GATS). The Zagreb Commercial Court (ZCC) decided on the law firm’s request for registration three times, and each time its decision to allow the registration was appealed by the Croatian Bar Association—in the first two appeals the High Commercial Court (HCC) annulled the decision of the ZCC and remanded it for new proceedings.36 In the view of the HCC, the first two requests for registration and the ZCC decisions allowing registration were too broad and went beyond the obligations which Croatia took in its GATS schedule of commitments.37