This is from Inside U.S. Trade:
the U.S. is negotiating market access [under the TPP] on the basis of bilateral offers, meaning it could end up imposing one tariff on Malaysian dairy products, for instance, and a different tariff for New Zealand.
Here's my question: Would such an arrangement be permitted under GATT Article XXIV? Paragraph 8(b) of Article XXIV says in part:
A free-trade area shall be understood to mean a group of two or more customs territories in which the duties and other restrictive regulations of commerce (except, where necessary, those permitted under Articles XI, XII, XIII, XIV, XV and XX) are eliminated on substantially all the trade between the constituent territories in products originating in such territories.
This provision doesn't specify whether you can have different tariffs for different members of a free trade area. I always assumed you had to charge everyone in an FTA the same tariff, but maybe that's not the case.
In the alternative, if there is a concern that discriminatory tariffs within an FTA are not permitted, perhaps the TPP will not be notified to the WTO as a free trade area itself, but rather as a bunch of separate bilateral FTAs?
Inside U.S. Trade also adds this: "This raises the question of what tariff rate the U.S. would apply to a dairy product that was jointly produced in Malaysia and New Zealand." If I had to guess, I would say the higher one, with litigation to follow.
I'm sure someone has thought about this more deeply than I have, so please feel free to explain it all to me in the comments.