UNIT-3

A) AGREEMENT ON AGRICULTURE

The Agreement on Agriculture is a modest first step towards serious reform of international rules
governing trade in agricultural products. The Agreement is built on three pillars:
(i) Increased market access for agricultural products,
(ii) Commitments to reduce domestic subsidies on agricultural production, and
(iii) Commitments to reduce export subsidies on agricultural products.

The Preamble to the Agreement conceives long-term objectives of the WTO members to establish a fair and
market oriented agricultural trading system that includes substantial reductions in agricultural support and
protection.

The Agreement on Agriculture requires:

The tariffication process although is an important step for liberalisation of agricultural trade in future WTO
negotiations, yet it is far from from a satisfactory solution. Guidelines for the calculation of tariff equivalents
are contained in Annex 5 of the Agreement. The tariff equivalent is generally the difference between the
internal and external price for the product, expressed as an ad valorem or specific duty rate.

Article 4 of the Agreement on Agriculture prohibits members from maintaining, resorting to or reverting to
non-tariff measures, old or new in order to eliminate the adverse effect that the non-tariff barriers have had
on agricultural trade.

Article 7 of the Agreement on Agriculture read with Annex 2 to the Agreement comes to grips on the trade
distorting aspects of domestic subsidies in the agricultural sector. The Agreement categorises domestic
subsidies by placing them in three boxes: an exempt green box (permissible and non-countervailable), and
excluded blue box (permissible, countervailing if they cause injury, but not subject to reduction
commitments), or an amber box (permissible but countervailing if they cause injury, and subject to reduction
commitments).

Article 3.2 of the Agreement imposes a standstill on the use of domestic subsidies, subject to the provisions
of Article 6, a member shall not provide support in favour of domestic producers in excess of commitment
levels specified in Section 1 of Part IV of the Schedule.

The Green Box subsidies are such subsidies which have a minimum trade distorting effect and as such are
exempt from GATT/WTO disciplines. Annex 2 of the Agreement on Agriculture provides that in order to
qualify as an exempt or green box domestic subsidy two threshold requirements are to be met:
1. The subsidy in question must be provided through a publicly funded government programme that does not
involve transfers from consumers, and
2. The subsidy must not have the effect of providing support to producers.
Annex 2 lists twelve types of exempt subsidies, including the following:
 Generalised government service programmes in areas of research, pest and disease control, and training,
 Domestic stockpiling for food security and domestic aid purposes,
 Direct payment to producers in the form of decoupled income support (support that is not tied to
production),
 Governments financial participation in income safety net and crop disaster insurance,
 Structural adjustment assistance provided through producer retirement programmes,
 Structural adjustment assistance provided through producer resource programmes,
 Structural adjustment assistance provided through investment aids, and
 Payments under environment and regional assistance programmes.
Article 6 of the Agreement on Agriculture, in addition to the green box subsidies exempted under Annex 2
listed above excludes from the Aggregate Measurement of Support (AMS) calculation three other categories
of domestic subsidies that have been described as ‘blue box subsidies’:
1. Certain developing country subsidies designed to encourage agricultural production,
2. Certain de minimis subsidies, and
3. Certain direct payments aimed at limiting agricultural production.
Article 6.2 of the Agreement excludes three types of government assistance, whether direct or indirect, from
AMS calculations:
 Investment subsidies which are generally available to low income or re source poor producers in
developing member country,
 Investment subsidies which are generally available to agriculture,
 Subsidies to agricultural producers to encourage diversification from growing illicit narcotic drugs.
The this type of ‘blue box’ subsidy is the direct payments made under production-limiting programmes and
are excluded provided:
1. They are based on fixed area and yields,
2. They are made on 85 per cent or less of the base level of production, or
3. They are livestock payments made on a fixed number of head (Article 6.5(a) of the Agreement).

Under the Agreement on Agriculture, all non-exempt, non-excluded domestic subsidies are calculated and
reduced to a single figure, the Aggregate Measurement of Support (AMS).

Article 1(a) of the Agreement defines the AMS as the annual level of support, expressed in monetary terms,
provided for an agricultural product in favour of the producers of the basic agricultural product or non-
product-specific support provided in favour of agricultural producers in general, other than support provided
under programmes that qualify as exempt from reduction under Annex 2 to this Agreement, which is:
(i) with respect to support provided during the base period, specified in the relevant tables of supporting
material incorporated by reference in Part IV of a Member’s Schedule; and
(ii) with respect to support provided during any year of the implementation period and thereafter, calculated
in accordance with the provisions of Annex 3 of this Agreement and taking into account the constituent data
and methodology used in the tables of supporting material incorporated by reference in Part IV of the
Member’s Schedule.

Article 10 of the Agreement on Agriculture prevents circumvention of the export subsidy reduction
commitments in four ways.
One, members agree not to circumvent the export subsidy reduction commitments through food aid except
in conformity with Article 10(1).
Two, members agree to work towards the development of internationally agreed disciplines on export
credits, export credit guarantees, and export insurance programmes.
Third, any member who claims that any quantity exported in excess of a reduction commitment level is not
subsidised must establish that no export subsidy, whether listed in Article 9 or not has been granted in
respect of quantity of exports in question.
Fourth, export subsidies not listed in paragraph 1 of Article 9 shall not be applied in a manner which results
in, or which threatens to lead to, circumvention of export subsidy commitments, nor shall non-commercial
transactions be used to circumvent such commitments.

B) AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES

The Subsidies Code of GATT 1980 (Tokyo Round), recognised the reality that subsidies are an important
tool of government policy, and are used to promote social and economic policies. The Subsidies Code (1980)
further notes some of the governmental objectives, which are promoted by the use of subsidies:
(a) The elimination of industrial, economic and social disadvantages of specific regions,
(b) To facilitate the restructuring, under socially acceptable conditions, of certain sectors, especially where
this has become necessary by reasons of changes in trade and economic policies, including international
agreements resulting in lower barriers to trade,
(c) Generally to sustain employment and to encourage, re-training and change in employment,
(d) To encourage research and development programmes, especially in the field of high technology
industries,
(e) Redeployment of industry in order to avoid congestion and environmental problems.

The Subsidies and Countervailing Measures Code (SCM Code) classifies subsidies by the use of a
metaphor of traffic lights, as green light (non-actionable), red light (prohibited) and yellow light (actionable).

For the purpose of the Code, a subsidy is deemed to exist if , there is:
(i) Financial contribution by a government or any public body within the territory of a member,
(ii) Government practice involving a direct transfer of funds,
(iii) Potential direct transfers of funds or liabilities, government revenue that is otherwise due, is foregone or
not collected, a government provides goods or services other than general infrastructure, or purchases goods,
(iv) A government makes payment to a funding mechanism, or entrusts or directs a private body to carry out
one or more of the type of functions illustrated in (i) and (ii) above which would normally be vested in the
government and the practice, in no real sense, differs from practices normally followed by governments, or
there is any form of income or price support in the sense of Article XVI of the GATT 1994 and a benefit is
thereby conferred.

The SCM Code in Article 4 provides for remedies against prohibited subsidies, that if a signatory to the
Agreement has reason to believe that a prohibited subsidy is being granted by another signatory,
consultation may be requested, the purpose of which shall be to clarify the facts of the situation and to arrive
at a mutually acceptable solution. If the consultation does not result in a solution, within a period of 30 days,
any member party may refer the matter to the DSB for the immediate establishment of a panel, unless the
DSB decides by consensus not to establish a panel. Once a panel is established, the panel may request the
assistance of the Permanent Groups of Experts (PGE) to see whether the measure in question is a prohibited
subsidy. The PGE shall have all the powers of reviewing the evidence of the existence or otherwise of the
measure in question and PGE has to afford an opportunity to the opposite party to justify that the measure is
not a prohibited subsidy. The PGE report is time bound and its conclusions whether or not a measure is
prohibited subsidy is final.

The yellow light subsidies, Part III of the SCM Code does not strictly define actionable subsidies and such
subsidies are neither prohibited nor exempt from challenge, and are yet open to complaint, or to
countervailing action, provided the necessary conditions are met. Article 5 of the SCM Code lays down the
general principles that no member should cause, through use of specific subsidy as defined in Articles 1 and
2 of the Code, adverse effects to the interests of other members. Article 5 of the SCM Code identifies three
types of adverse effects such as (a) injury to the domestic industry of another member, (b) nullification and
impairment of benefits accruing under GATT 1994, and (c) serious prejudice to the interests of another
member.

Part IV in Article 8 of the SCM Code defines three categories of non-actionable subsidies, in addition to
the general exclusion of non-specific subsidies. The non-actionable subsidies or the green light subsidies are:
(a) Assistance for basic research, up to a maximum of 75% of the cost, or ‘for pre-competitive development’
up to a maximum of 50%,
(b) Assistance to disadvantages regions, provided that the aid is not limited to specific industries or
enterprises within a region, is given as part of a general scheme of regional development, and the region can
be shown to be disadvantaged (in terms of such measures as GNP and unemployment rates) by comparison
with the member country as a whole, or
(c) Assistance to promote adaptation of existing facilities to new environmental requirements imposed by
law and/or regulations which result in greater constraints and financial burden on firms, provided the
assistance is given on a one-time basis, and limited to 20% of the total costs and is generally available.

Article 27 of the Code and its Annex VII dealing with the special and differential treatment of developing
countries were highly controversial when they were released. Both developed and developing countries were
dissatisfied with the substance of these provisions.
Article 27 of the Code begins with a recognition that subsidies may play an important role in development
programmes of developing countries and then specifies which developing countries will be exempt from the
prohibition of Article 3(1)(a) against the use of export subsidies and subsidies contingent on export
performance:
(a) Developing country signatory referred to in Annex VII and,
(b) Other developing country signatories for 8 years from the date of entry into force of this Agreement
subject to compliance with the provision in paragraph 4.

Members shall take necessary steps to ensure that the imposition of a countervailing duty of any product of
the territory of any member imported into the territory of another member is in accordance with the
provisions of Article VI of GATT 1994 and the terms of the Code. Countervailing duties may only be
imposed pursuant to investigations initiated and conducted in accordance with the provisions of the
Agreement and the Agreement on Agriculture.

No countervailing duties shall be levied on any product of the territory of any contracting party in excess of
an amount equal to the estimated bounty or subsidy determined to have been granted directly or indirectly,
on the manufacture, production or export of such product in the country of origin or exportation, including
any special subsidy to the transportation of a particular product. The term ‘countervailing duty’ shall be
understood to mean a special duty levied for the purpose of offsetting any bounty or subsidy bestowed
directly, or indirectly, upon the manufacture, production or export of any merchandise.

C) AGREEMENT ON ANTI-DUMPING

The three basic preconditions which have to be met before anti-dumping action can take place are set in
Article VI of GATT 1994. In particular the WTO members taking such measure must have determined:
(i) That imports in question are dumped,
(ii) That its own industry is materially injured, or is threatened with material injury or that the establishment
of a domestic industry is being materially retarded, and
(iii) That the injury under (ii) is being caused by the dumped imports.

Article VI of the GATT defines dumping as offering a product for sale in export markets at less price below
its normal value. The normal value of a product is defined as the price charged by a firm in its home market
in the ordinary course of trade.

GATT permits the levying of an anti-dumping duty on goods only for a contracting party which has
ascertained that the effect of dumping is such as to cause or threaten material injury to an established
domestic industry, or is such as to retard materially the establishment of a domestic industry.

The Kennedy Round Code, 1967 had three functions: (1) to clarify and elaborate on the broad concepts of
Article VI of the GATT, (2) to supplement Article VI by establishing appropriate procedural requirements
for anti-dumping investigations, and (3) to bring all GATT contracting parties into conformity with Article
VI.

The Uruguay Round Code, i.e., the Agreement on the Implementation of Article VI of the GATT 1994
(Anti Dumping Agreement) is a lengthy and complex legal document. The Agreement contains 18 Articles
with two Annexures along with declarations on Anti-circumvention Measures.

Article 2 is one of the most important Article of the Code, dealing with the very essence of the subject: the
determination of dumping. Product is being considered dumped when introduced into the commerce of
another country or sold at less than normal value if the export price of the product exported from one
country to another is less than comparable price, in the ordinary course of trade, for the like-products when
destined for consumption into the exporting country.
The ‘like product’ which has been defined in Article 2.6 as “product which is identical, i.e., alike in all
respects to the product under consideration, or in the absence of such a product, another product which,
although not alike in all respects, has characteristics closely resembling those of the product under
consideration”, may not be sold on the home market of the exporting country at all or it may be sold on
terms that do not reflect its costs, or in such small quantities that fair comparison is impossible.

As a general rule the period of data collection for dumping investigations normally should be 12 months
and in any case not less than 6 months, ending as close to the date of initiation as is practicable.

In determining whether dumping exists, Article 2.1 usually requires comparison of the export price with the
comparable price, in the ordinary course of trade, of or the like product when destined for the consumption
in the exporting country, whereas Article 2.3 authorises member to construct the export price where, inter
alia, the actual export price is unreliable because of association between the exporter and the importer.
Further Article 2.3 specifies that the export price may be constructed on the basis of price at which the
imported products are first resold to an independent buyer. The rules governing the methodology for
construction of an export price are set out in Article 2.4 which provides that “in the cases referred to in
paragraph 3, allowance for costs, including duties and taxes, incurred between importation and resale, and
for profits accruing, should also be made”.

In EC-Dumping Duties on Imports of Cotton-Type Bed Linen from India (EC Bed Linen Case), India
challenged the European Communities practice of ‘Zeroing’ which was summarised in the Report as, “First,
the EC identified with respect to the product under investigation cotton-type bed linen certain number of
different ‘models’ or ‘types’ of that product. Next, the EC calculated, for each of these models, a weighted
average normal value and a weighted average export price. Then the EC compared the weighted average
normal value with the weighted average export price for each model. For some models, normal value was
higher than export price, by subtracting export price from normal value for these other models, the EC
established ‘negative dumping margin’. The ‘negatives’ and ‘positives’ of the amounts in this calculation are
an indication of precisely how much the export price is above or below the normal value. Having made this
calculation the EC then added up the amounts it had calculated as ‘dumping margins’ for each model of the
product in order to determine an overall dumping margin for the product as a whole. However, in doing so
the EC conducted ‘zeroing’, i.e., any ‘negative dumping margin’ as zero. The consequences of this zeroing
were an increase in the resulting dumping margin.
The Panel held that the consequences of this ‘zeroing’ practice were inconsistent with the provisions of
Article 2.4.2.

The Agreement prescribes that a determination of injury must be based on ‘positive evidence’ and involves
an examination of both:
(a) The volume of the dumped imports and their effect on the prices in the domestic market for like products,
and
(b) The consequent impact of these imports on domestic producers of like products.

In interpretation and application to Article 3 was laid by the Appellate Body in the Thailand Anti-
Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland
(Thailand- H-Beams Case) as, “Article 3 as a whole is concerned with obligations of members with respect
to the determination of injury. Article 3.1 is an overreaching provision that sets forth a member’s
fundamental, substantive obligations. The obligations concern the determination of the volume of dumped
imports, and their effect on prices (Article 3.2), investigations of imports from more than one country
(Article 3.3), the impact of dumped imports on the domestic industry (Article 3.4), causality between
dumped imports and injury (Article 3.5), the assessment of the domestic production of the like product
(Article 3.6), and the determination of the threat of material injury (Articles 3.7 and 3.8).

Article 3.7 of the Agreement sets forth the requirement that an Investigation Authority has to comply with in
the case of threat of injury in examination:
1) A determination of threat injury must be based on facts and not merely on allegation or remote possibility.
2) The expected injury must be imminent and clearly foreseen.
The following factors must be considered by the Investigation Authority:
a) Whether dumped imports have been increasing at a significant rate which indicates the likelihood of
substantially increased importation.
b) Whether the prices of dumped imports are such that they have a significant price depressing or
suppressing effect on domestic prices and would therefore likely increase demand for further inputs.

The definition of ‘domestic industry’ is important for the fact that dumping investigation could not normally
be launched except in response to an application by or on behalf of the industry. Article 4.1 provides that
the term ‘domestic industry’ refers normally, “to the domestic producers as a whole of the like products or to
those whose collective output of the products constitutes a major proportion of the total domestic production
of those products’.

There are two exceptions:

D) GENERAL AGREEMENT ON TRADE IN SERVICES

The General Agreement on Trade in Services (GATS), under the General Agreement on Tariffs and
Trade (GATT) Uruguay Round, was a major step in unchartered terrain of liberalising trade in services.
GATS consist of 29 articles. The Agreement contains the following components:
 Concepts (Part I) and general obligations and disciplines (Part II) that apply across the board to
measures affecting trade in services,
 Specific commitments (Part III),
 A commitment by members to enter into a successive round of negotiations aimed at progressive
liberalisation (Part IV),
 Institutional provisions (Part V) and final provisions (Part VI), and
 Various attachments, mainly in the form of sectoral Annexes and Ministerial Declarations.

PART I

ARTICLE I

Part I, which consists of a sole article, i.e., Article I, defines the scope and coverage of the GATS. The
Agreement “applies to measures by members affecting trade in services”. Services includes any service in
any sector except services supplied in the exercise of governmental authority. The Agreement specifies
“measures by members” of central, regional or local governments and authorities as well as to measures
taken by non-governmental bodies in the exercise of powers delegated to them by those governments.

For the purposes of the Agreement a comprehensive definition of trade in services in terms of four different
modes has been provided in the GATS. Mode 1 is the supply of service “from the territory of one member
into the territory of another member”. in the WTO jargon this process is known as Cross-Border Supply of
Services. Mode 2 is the supply of a service “in the territory of one member to the service consumer of any
other member”. This mode is known as Consumption Abroad. Mode 3 is the supply of a service “by a
service supplier of one member, through commercial presence in the territory of any other member”. This
mode is known as Commercial Presence. Mode 4 is the supply of a service “by a service supplier of one
member through presence of natural persons of a member in the territory of any other members”. This mode
known as the Presence of Natural Persons.

PART II

Part II of GATS lays down the Agreement’s general obligations and disciplines. These constitute the basic
rules that apply to all members and to all services.
ARTICLE II

Article II of GATS provides for the Most-Favoured Nation Treatment clause which has direct parallels to
the centrally important Article I of the GATT. It requires that members “accord immediately and
unconditionally to services and service suppliers of any other Member, treatment no less favourable than
that it accords to like services and service suppliers of any other country”. The GATS regime, however,
contains one unique provision. Article II:2 permits WTO members to “maintain a measure inconsistent with
paragraph 1 provided that such a measure is listed in, and meets the conditions of, the Annex on Article II
Exemptions”.

Provision for MFN exemptions is, however, to have a more profound impact on the pattern of commitments.
Legally speaking, members are permitted to maintain measures inconsistent with the MFN obligation simply
by listing them. Again, there are some limits bound up with the decision to make commitments under the
Agreement. The MFN exemption is not meant to retract from the commitments which a member can do in
its schedule.

The Annex on Article II Exemptions of GATS laid down some formal conditions for the making of
exemptions. The GATS allowed members to apply for new exemptions after the WTO Agreements had
entered into force. But these exemptions need to attract the support of 3/4 of all the member countries. Each
exemption has to be terminated at one point. No exemption will run for more than 10 years.

ARTICLE III

Article III of the GATS contains a number of obligations aimed at ensuring a certain level of transparency
with regard to member’s measures. As with GATT, transparency is a core principle of GATS. The
transparency obligation operates on three levels in the GATS.
Firstly, it obligates each WTO member to promptly publish all relevant measures e.g., laws and regulations,
of general application which pertain to or effect the operation of GATS.
Secondly, WTO members must also, at least annually inform the Council for Trade in Services of the
introduction of any new laws, or any changes to existing laws, regulations or administrative guidelines
which significantly affect trade in services covered by their specific commitments under the Agreement.
Finally, GATS further provides for the establishment of enquiry points by members for the purpose of
responding to requests for information on the measures of general application. WTO members must respond
to any request by other members.

ARTICLE XIV

There are exceptions in Article XIV of GATS, similar to those in Article XX of GATT, that allow countries
to adopt measures inconsistent with an obligation as long as measures are not disguised restrictions on trade.
To begin with Article permits the adoption or enforcement of measures necessary to protect public morals,
to maintain public order, or to protect human, animal or plant life or health.

The GATS exceptions allow measures that are necessary to ensure compliance with rules or regulations
relating to the prevention of deceptive and fraudulent practices or to deal with the effects of a default on
services contracts. This exception also extends to the protection of the privacy of the individuals in relation
to the processing and dissemination of personal data and also the protection of confidentiality of individual
records and accounts.

The GATS Article XIV(d) allows measures inconsistent with the national treatment, which aimed at
ensuring the equitable or effective imposition or collection of direct taxes in respect of services or service
suppliers of other members. The General Exceptions under Article XIV also covers measures inconsistent
with the MFN obligation, provided the differences in treatment are the result of an agreement on the
avoidance of double taxation.
The exceptions of Article XIV of GATS reflect policy objectives that WTO members recognise as
legitimate and that, upon meeting certain conditions, can be implemented without giving rise to a breach of
the Agreement. One must first determine whether the measure at stake falls within the ambit of paragraphs
(a) to (e) of Article XIV. If in the affirmative, then one must determine whether the measure also meets the
requirements of the ‘Chapeau’, that is, whether it is applied in a manner which constitutes a means of
arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised
restriction on trade in services. It must be emphasised here that under the ‘Chapeau’, what is at stake is not
so much the questioned measure or its specific content, but rather the manner in which it is applied. The
purpose and object of the ‘Chapeau’ is essentially to prevent the abuse of the specific exceptions set out in
paragraphs (a) to (e).

ARTICLE XIV bis

The security exceptions under the GATS are virtually identical with those of the GATT. Article XIV bis
allows a member to withhold information to take actions that are necessary to its essential security interests.
It allows a WTO member from taking any actions which it considers necessary for the protection of essential
security interests relating to the supply of services for the purposes of military establishment, relating to
fissionable and fusionable materials and also taken action in the time of war or other emergency in
international relations. It also allows a WTO member to take appropriate action in pursuance of its
obligations under the UN Charter for the maintenance of internal peace and security. The Council for Trade
in Services is the body to which all WTO members are obliged to inform of the actions taken by them under
security exceptions.

PART III

Part III of the GATS, entitled ‘specific commitments’. sets out the obligations relating to market access and
national treatment. These obligations apply only where a member has taken specific commitments in a given
sector.

ARTICLE XVI

Access by service providers of one state to the markets of other states is the central focus of GATS. But
under GATS this access is not granted automatically. That GATS adopts an ‘opt-in’ or positive list approach,
whereby members are bound only with respect of specific commitments by sector or sub-sector. The
following types of measures under Article XVI which a WTO member shall not maintain or adopt either on
the basis of a regional subdivision or on the basis of its entire territory, unless otherwise specified in its
schedule:
(i) limitations on the number of service suppliers whether in the form of numerical quotas, monopolies,
exclusive service suppliers or the requirements of an economic needs test;
(ii) limitations on the total value of service transactions or assets in the form of numerical quotas or the
requirement of an economic needs test;
(iii) limitations on the total number of service operations or on the total quantity of service output expressed
in terms of designated numerical units in the form of quotas or the requirement of an economic needs test;
(iv) limitations on the total number of natural persons that may be employed in a particular service sector or
that a service supplier may employ and who are necessary for, and directly related to, the supply of a
specific service in the form of numerical quotas or the requirement of an economic needs test;
(v) measures which restrict or require specific types of legal entity or joint venture through which a service
supplier may supply a service; and
(vi) limitations on the participation of foreign capital in terms of maximum percentage limit on foreign
shareholding or the total value of individual or aggregate foreign investment.

Thus, the market access of GATS is a kind of foreign investment code － more extensive than any
obligation thus for concluded in the WTO/GATT system. But its applicability depends to the extent a
member state agrees to be bound.
ARTICLE XVII

National treatment is a norm well within the ken of international trade, including the GATT, but it carries
distinctive implications for services sectors. Article XVII:1 states that in the sectors inscribed in its
Schedule, and subject to any conditions and qualifications set out therein, each Member shall accord to
services and service suppliers of any other Member, in respect of all measures affecting the supply of
services, treatment no less favourable than that it accords to its own like services and service suppliers.

The basic obligation as stated in Article XVII:1 is very similar to that of national treatment rule in Article III
of GATT 1994. but in the case of services this commitment is limited only to the specific items mentioned in
the schedule of the particular country. The national treatment norm creates both a goal and an obligation.

It is a goal in the sense that each round of negotiations is meant to work towards commitments to national
treatment. It is an obligation in the sense that members must accord national treatment in respect of all
measures affecting the supply of services in the sectors inscribed in their schedules and subject to any
conditions or qualifications set out therein. Members can thus prevent the operation of the norm by declining
to inscribe sectors. But where a sector is inscribed, all such measures are caught by the norm unless and to
the extent that conditions have been listed.

The United States － superfund, panel report first made the point that for GATT Article III to be violated
one need not show actual trade effects, since Article III (like GATT Article II and XI) establishes
competitive conditions. The findings of the panel report have been incorporated in GATS Article XVII:3.
The test is practical and realistic one. It is not necessarily that foreigners and locals are given formal equality,
or what some commentators term facially non-discriminatory treatment, but what the treatment means
effectively for the competitive relationship between them. The foreigner should enjoy equivalent
opportunities to compete. It does not mean that member is under an obligation to ensure that foreigners
enjoy success in the market place. It is only the opportunity to compete which should be equivalent so far as
governmental measures are concerned.