Question 1

Country A, Country B, and Country C were member states of the World Trade Organisation (WTO).

(a) Country A was a major exporter of rice
(b) Country B was a major exporter of vegetables
(c) Country C, being a non-food producing country, was a major importer of rice and vegetables from Country A and Country B, respectively, for many years The recent COVID-19 pandemic has, however, caused Country C to discover weaknesses in its food import program for relying 100 per cent on its immediate neighbours for food security.

Therefore, Country C decided to diversify its sourcing and produce food domestically when possible. For instance:

(a) Country C, notwithstanding the longer distance, decided to import rice from another three WTO member countries.

(b) Country C also decided to grow its own vegetables, aiming to produce 50 percent of the country’s demand in 15 years.

To support the policies, Country C launched two measures: First, a 5% import tariff relief for rice imported from the three faraway countries (to offset the higher logistics costs).

Second, a 15% sales tax on all imported vegetables to help local vegetable start-up farms be more price competitive in the domestic market.

Two years into the program, Country A and Country B suffered a significant decline in exports as Country C was importing less from them. The two countries intend to request a consultation with Country C under the WTO’s dispute settlement body.

(a) Explain the Most Favored Nation (MFN) principle in the context of the General Agreement on Tariffs and Trade (GATT).

(b) Illustrate whether Country A and Country B can claim against Country C for breach of the MFN principle. You should support your answer with appropriate WTO dispute cases and explain why these cases are applicable.

Question 2

With reference to the scenario in Question 1,

(a) Assuming Country C’s import tariff relief to the three other countries was a result of preferential trade agreement (PTA) or generalized system of preference (GSP). Does this new information alter your response on whether Country C has violated MFN principle? Support your answer with a GATT Article or demonstrate your answer with a dispute settlement (DS) case.

(b) Assuming that Country C is Singapore, the three other faraway countries are China, Peru, and United States. List all the preferential trade agreements that Singapore has with these countries.