The World Trade Organization (WTO) is a global organization that regulates international trade and ensures that trade flows smoothly, predictably, and freely. One of the essential aspects of trade regulated by the WTO is related party trade. Related party trade refers to the import or export of goods and services between entities within the same organization or under common control. The WTO has established rules and agreements to regulate related party trade in order to ensure fair trade practices and prevent abuse.
One key agreement related to related party trade is the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade (GATT). This agreement provides guidelines for the application of anti-dumping measures to imports from related parties. Anti-dumping measures are tariffs applied to imports that are sold below their fair market value, typically to protect domestic industries from unfair competition.
The WTO Agreement on Implementation of Article VI of the GATT requires that anti-dumping investigations be conducted objectively and that any measures taken are based on evidence that the imports are causing injury to the domestic industry. The agreement also provides for the possibility of exemptions to anti-dumping measures in the case of related party trade. However, such exemptions must be based on clear and transparent criteria and must not be used to circumvent the rules of the agreement.
Another related party trade agreement is the WTO Agreement on Subsidies and Countervailing Measures (SCM). This agreement provides guidelines for the application of countervailing measures to imports from related parties. Countervailing measures are tariffs applied to imports that benefit from subsidies provided by the exporting country`s government.
Under the SCM agreement, countervailing measures are only allowed if the subsidies in question are specific and cause injury to the domestic industry. The agreement also requires that investigations be conducted objectively and that any measures taken be based on evidence of injury.
In addition to these agreements, the WTO has established a dispute settlement mechanism to resolve any disputes related to related party trade. This mechanism provides for consultations and mediation, followed by a panel hearing and, if necessary, an appeal to the Appellate Body.
In conclusion, the WTO has established rules and agreements to regulate related party trade and ensure fair trade practices. These agreements provide guidelines for the application of anti-dumping and countervailing measures and require investigations to be conducted objectively and based on evidence of injury. The WTO`s dispute settlement mechanism provides a means for resolving disputes related to related party trade and upholding the rules and agreements established by the organization.
