Customs Unions under the Enabling Clause

This paper examines how developing countries establish Customs Unions (CUs) under the Enabling Clause, implementing internal trade liberalization and Common External Tariffs (CETs). Although these CUs aim to create single markets, they often face challenges such as incomplete CETs and unilateral deviations from agreed CETs due to domestic policy considerations. While countries prefer the Enabling Clause as a legal basis due to its greater flexibility compared to GATT Article XXIV, legal inconsistencies arise when CETs exceed bound tariff commitments under GATT Article II. The Enabling Clause does not provide legal justification for such inconsistencies with GATT obligations. To address this gap, CUs formed under the Enabling Clause adopt various strategies to establish an additional legal basis: submitting new notifications under GATT Article XXIV, referencing Article XXIV in founding treaties, or invoking GATT Article XXIV:6 to renegotiate tariff concessions. These adaptations reflect developing countries’ efforts to preserve the flexibility afforded by the Enabling Clause while conforming to broader GATT obligations.