Country A, Country B, and Country C were member states of the World Trade Organisation (WTO) Country A was a major exporter of rice Country B was a major exporter of vegetables 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 Country C, notwithstanding the longer distance, decided to import rice from another three WTO member countries Country C also decided to grow its own vegetables, aiming to produce 50 per cent 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 Question Assuming Country C's import tariff relief to the three other countries was a result of a preferential trade agreement (PTA) or generalized system of preference (GSP) Does Country C has violated MFN principle Support your answer with a GATT Article or demonstrate your answer with a dispute settlement (DS) case

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Posted on Jun 20, 2024

Country A, Country B, and Country C were member states of the World Trade Organisation (WTO). Country A was a major exporter of rice Country

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

Country A was a major exporter of rice
Country B was a major exporter of vegetables
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:

Country C, notwithstanding the longer distance, decided to import rice from another three WTO member countries.
Country C also decided to grow its own vegetables, aiming to produce 50 per cent 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.

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