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The Chapeau of the General Exceptions in the WTO GATT and GATS Agreements: A Reconstruction

  • Lorand Bartels (a1)
Extract

One of the most important issues in the law of the World Trade Organization is the right of WTO members to adopt measures for nontrade purposes. In the WTO’s General Agreement. on Tariffs and Trade (GATT 1994) and General Agreement on Trade in Services (GATS), this right is secured in general exceptions provisions, which permit WTO members to adopt measures to achieve certain objectives, notwithstanding any other provisions of these agreements and also, in some cases, other WTO agreements. These objectives include, most importantly, the protection of public morals, the maintenance of public order, the protection of human, animal, or plant life or health, the enforcement of certain domestic laws, and the conservation of exhaustible natural resources.

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1 General Agreement on Tariffs and Trade 1994, Art. XX, Apr. 15, 1994 [hereinafter GATT 1994], Marrakesh Agreement Establishing the World Trade Organization [hereinafter WTO Agreement], Annex 1A, 1867 UNTS 187; General Agreement on Trade in Services, Art. XIV, Apr. 15, 1994, WTO Agreement, supra, Annex 1B, 1869 UNTS 183 [hereinafter GATS]. WTO legal texts are available at https://www.wto.org/english/docs_e/legal_e/legal_e.htm and reprinted in The Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations (Cambridge University Press, 1999).

2 The general exceptions also apply to obligations in related WTO agreements, sometimes expressly, as in the Agreement on Trade-Related Investment Measures, Art. 3, Apr. 15, 1994, WTO Agreement, supra note 1, Annex 1A, 1868 UNTS 186, and the Agreement on Trade Facilitation, Art. 24(7), WTO Doc. WT/L/931 (July 15, 2014) (not yet in force), and sometimes by implication, as in relation to certain obligations in accession protocols. See, e.g., Appellate Body Report, China—Measures Affecting Trade Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, para. 415, WT/DS363/AB/R (adopted Jan. 19, 2010). Documents for WTO disputes are available at https://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm#disputes.

3 This exception is not included in GATT 1994, supra note 1, Art. XX.

4 This last exception is not included in GATS, supra note 1, Art. XIV.

5 GATT 1994, supra note 1, Art. XX(g).

6 Id., Art. XX(a).

7 GATT 1994, supra note 1, Art. XX. The chapeau of GATS, supra note 1, Art. XIV, uses the term “like conditions” instead of “same conditions,” but this difference does not appear to be significant.

8 Appellate Body Report, United States—Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R (adopted May 20, 1996) [hereinafter Appellate Body Report, U.S.—Gasoline].

9 Appellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products, W T/DS58/AB/R (adopted Nov. 6, 1998) [hereinafter Appellate Body Report, U.S.—Shrimp].

10 Appellate Body Report, United States—Measures Affecting the Cross-border Supply of Gambling and Betting Services, WT/DS285/AB/R (adopted Apr. 20, 2005) [hereinafter Appellate Body Report, U.S.—Gambling].

11 Appellate Body Report, Brazil—Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R (adopted Dec. 17, 2007) [hereinafter Appellate Body Report, Brazil—Retreaded Tyres].

12 Appellate Body Report, European Communities—Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/AB/R (adopted June 18, 2014) [hereinafter Appellate Body Report, EC—Seal Products] (reported by Gregory Shaffer and David Pabian at 109 AJIL 154 (2015)).

13 Appellate Body Report, U.S.—Gasoline, supra note 8, at 22.

14 Id.

15 For simplicity, this article refers to discrimination between “products.” For the chapeau in Article XIV of GATS, the appropriate reference would be to “services” and also, most likely, “service suppliers.”

16 See infra text accompanying note 89.

17 Appellate Body Report, U.S.—Gasoline, supra note 8, at 22.

18 Appellate Body Report, U.S.—Shrimp, supra note 9, para. 116.

19 Id., para. 160.

20 A measure can be any act or omission attributable to the WTO member at issue. See Appellate Body Report, United States—Sunset Review of Anti-dumping Duties on Corrosion-Resistant Steel Flat Products from Japan, para. 81, WT/DS244/AB/R(adopted Jan. 9, 2004), referring to the Understanding on Rules and Procedures Governing the Settlement of Disputes, Art. 3.3, Apr. 15, 1994, WTO Agreement, supra note 1, Annex 2, 1869 UNTS 401 [hereinafter Dispute Settlement Understanding]. It may also be an unpublished practice, as in Appellate Body Report, Argentina—Measures Affecting the Importation of Goods, WT/DS444/AB/R (adopted Jan. 26, 2015).

21 See generally Articles on Responsibility of States for Internationally Wrongful Acts, in, Report of the International Law Commission on the Work of Its Fifty-Third Session, UN GAOR, 56th Sess., Supp. No. 10, at 26, UN Doc. A/56/10 (2001). The articles are annexed to General Assembly Resolution 56/83 (Dec. 12, 2001). Articles 2 and 12 describe “wrongful acts” as conduct consisting of acts or omissions, and Articles 20 to 25 describe circumstances precluding the wrongfulness of these same “acts.” In the WTO context, see Appellate Body Report, Thailand—Customs and Fiscal Measures on Cigarettes from the Philippines, para. 177, WT/DS371/AB/R (adopted July 15, 2011) (referring to “treatment”), and William Davey & Maskus, Keith, Thailand—Cigarettes (Philippines): A More Serious Role for the “Less Favourable Treatment” Standard of Article III, 12 World Trade Rev. 163, 183 (2013). See also infra text accompanying note 68.

22 The language of “violation” is used here as shorthand. It is suggested below, see infra text accompanying note 99, that the general exceptions apply to “nonviolation” measures. If so, then the “measure” would be defined by reference to the conduct causing the relevant “nullification or impairment” of “benefits” accruing to the affected WTO member under GATT 1994 or GATS.

23 For example, the definition of “customs duties” in GATT 1994, supra note 1, Art. II, and of certain “quantitative restrictions” in GATT 1994, supra note 1, Art. XI:1. See also infra note 60.

24 For example, the definition of “sanitary or phytosanitary measure” in the Agreement on the Application of Sanitary and Phytosanitary Substances, Annex A, para. 1, Apr. 15, 1994, WTO Agreement, supra note 1, Annex 1A, 1867 UNTS 493.

25 GATT 1994, supra note 1, Art. I:1.

26 GATS, supra note 1, Art. II.1. When it is burdensome conduct that produces “less favourable treatment”, it is arguably that burdensome conduct alone that constitutes the “measure.” Any parallel, less burdensome conduct should arguably not be treated as part of the “measure” but should be considered, if at all, in the context of determining whether the “less favourable treatment” is caused by the more burdensome conduct in question.

27 Appellate Body Report, U.S.—Gasoline, supra note 8, at 13–14. The Appellate Body might have instead identified the “measure” as the most burdensome baseline that caused “less favourable treatment,” as noted supra note 26. That it did not is immaterial, however, to the result.

28 Id. (measure under Articles III and XX of GATT 1994, supra note 1); id. at 16 (same measure under Article XX(g) of GATT 1994); id. at 22 (same measure under the chapeau and Article XX(g) of GATT 1994). The Appellate Body is sometimes criticized for having identified a discriminatory “measure” that violated a substantive non-discrimination obligation, but then having justified a different, broader “measure” under Article XX of GATT 1994. Robert Hudec said that “the Appellate Body ruled that the ‘measure’ to be tested [under Article XX of GATT 1994] was the entire regulation in which the GATT-illegal provision appeared.” Hudec, Robert, GATT/WTO Constraints on National Regulation: Requiem for an “Aim and Effects” Test, 32 Int’l Law. 619, 637 (1998). To the same effect, see Davey & Maskus, supra note 21, at 182– 83. This criticism is misdirected. On the relevance of the discriminatory and other features of the measure under different GATT 1994 provisions, see infra text accompanying notes 66–70.

29 The Appellate Body did discuss, in the context of the chapeau, the failure of the U.S. authorities to cooperate with Venezuela and its producers, but the purpose of the discussion was to identify alternative less discriminatory measures. That is not the same as treating the U.S. failure to cooperate as the “application” of the measure at issue. See Appellate Body Report, U.S.—Gasoline, supra note 8, at 27–28.

30 Panel Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products, para. 8.1, WT/DS58/R (adopted Nov. 6, 1998).

31 Appellate Body Report, U.S.—Shrimp, supra note 9, para. 141.

32 Id., para 161.

33 See Davies, Arwel, Interpreting the Chapeau of GATT Article XX in Light of the ‘New’ Approach in Brazil-Tyres, 43 J. World Trade 507, 529–30 (2009). Davies also refers in this context to the Appellate Body’s reports in U.S.—Gambling, supra note 10, and Brazil—Retreaded Tyres, supra note 11.

34 Indeed, in United States—Import Prohibition of Certain Shrimp and Shrimp Products (Recourse to Article 21.5 of the DSU by Malaysia), para. 79, WT/DS58/AB/RW (adopted Oct. 22, 2001) [hereinafter Appellate Body Report, U.S.—Shrimp (Article 21.5—Malaysia)], the Appellate Body stated that for the purposes of the chapeau, the “measure” comprised legislation, implementing regulation, and practice.

35 Appellate Body Report, China—Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum, paras. 5.113, .138, WT/DS431/AB/R (adopted Aug. 29, 2014).

36 Appellate Body Report, EC—Seal Products, supra note 12, para. 5.302. The Appellate Body’s willingness to consider the “expected application” of the measure contrasts with U.S.—Shrimp (Article. 21.5—Malaysia), supra note 34, para. 148, where it said that, “[a]s Malaysia has not applied for certification, any consideration of whether Malaysia would be certified would be speculation.”

37 Appellate Body Report, U.S.—Gasoline, supra note 8, at 22.

38 Appellate Body Report, U.S.—Shrimp, supra note 9, para. 158.

39 In The WTO’s Reading of the GATT Article XX Chapeau: A Disguised Restriction on Environmental Measures, 22 U. Pa J. Int’l. Econ. L. 739, 839 (2001), Sanford Gaines makes the same point, albeit without a detailed analysis of the doctrine of abuse of rights.

40 Bin Cheng, General Principles Of Law as Applied by International Courts and Tribunals, ch. 4 (1953), quoted in Appellate Body Report, U.S.—Shrimp, supra note 9, para. 158 n.156.

41 CHENG, supra note 40, at 125.

42 North Atlantic Coast Fisheries (UK v. U.S.), 11 R.I.A.A. 167 (Perm. Ct. Arb. 1910).

43 Id. at 189.

44 Hersch Lauterpacht, The Development of International Law by the International Court 162–65 (Rev. ed. 1958); F. V. Amador, Garcia, State Responsibility: Some New Problems, 94 Recueil Des Cours 365, 381 (1958 II); Byers, Michael, Abuse of Rights: An Old Principle, a New Age, 47 Mcgill L.J. 389, 424–29 (2002).

45 Schwarzenberger, Georg, Uses and Abuses of the “Abuse of Rights” in International Law, 42 Transactions Grotius Soc’y 147, 153–54, 172, 177 (1956). The doctrine of abuse of rights also has more application when the rights at issue are otherwise considered to be absolute.

46 See the individual opinions in Whaling in the Antarctic (Austl. v. Japan) (Int’l Ct. Justice Mar. 31, 2014) in relation to the question whether Japan had acted in good faith. See id., Diss. Op. Owada, J., paras. 21–22; id., Diss. Op. Abraham, J., paras. 28–29; id., Diss. Op. Yusuf, J., para. 54; id., Sep. Op. Greenwood, J., para. 29; id., Sep. Op. Sebutinde, J., para. 29. See also Rolland, Sonia, Whaling in the Antarctic (Australia v. Japan: New Zealand Intervening), 108 AJIL 496, 501 (2014). In EU law the principle of abuse of rights also implies that an act had had an improper purpose. See Vogenauer, Stefan, The Prohibition of Abuse of Law: An Emerging General Principle of EU Law, Prohibition Of Abuse of Law: A New General Principle of EU Law? (Feria, Rita dela & Vogenauer, Stefan eds., 2011). The same applies in investment arbitrations. See Ascensio, Hervé, Abuse of Process in International Investment Arbitration, J Int’l Disp. Settlement 763, 780 (2014).

47 CHENG, supra note 40, at 133; Robert Kolb, La bonne foi en droit international public, REVUE BELGE DE DROIT INTERNATIONAL 661, 721–22 (1998); Byers, supra note 44, at 424 –29 (2002). But see Schwarzenberger, supra note 45, at 172, 177 (stating that these rules on aliens, too, are merely rules of customary international law).

48 See part V below.

49 Appellate Body Report, U.S.—Shrimp, supra note 9, para. 159.

50 CHENG, supra note 40, at 132.

51 Appellate Body Report, U.S.—Gasoline, supra note 8, at 20.

52 Appellate Body Report, U.S.—Shrimp, supra note 9, para. 120.

53 Appellate Body Report, U.S.—Gambling, supra note 10, para. 292. InEC—Seal Products, supra note 12, para. 5.215, the Appellate Body said that there was no “pre-determined threshold level of contribution” for determining whether a measure was “necessary” to protect public morals. This does not mean that a measure need not make any contribution to the protection of public morals. See Appellate Body Report, United States—Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para. 322 n.647, WT/DS381/AB/R (adopted June 13, 2012) [hereinafter Appellate Body Report, U.S.—Tuna II], where the Appellate Body said, in the context of the “necessity” test in the Agreement on Technical Barriers to Trade, Art. 2.2, Apr. 15, 1994, WTO Agreement, supra note 1, Annex 1A, 1868 UNTS 120 [hereinafter TBT Agreement], that a panel may not be required to undertake a review of alternative measures “if a measure is trade restrictive and makes no contribution to the achievement of the legitimate objective.” The legitimate objectives set out in the Article 2.2 of the TBT Agreement include public morals. Panel Report, European Communities—Measures Prohibiting the Importation and Marketing of Seal Products, para. 7.418, WT/DS400/R (adopted, as modified, June 18, 2014).

54 See Appellate Body Report, China—Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum, supra note 35, paras. 5.136 –.141.

55 See GATT 1994, supra note 1, Art. XX(a) (protection of public morals), (b) (protection of human, animal, or plant life or health), (d) (compliance with certain domestic laws or regulations); GATS, supra note 1, Art. XX(a) (protection of public morals and maintenance of public order), (b) (protection of human, animal, or plant life or health), (c) (compliance with certain domestic laws or regulations).

56 Appellate Body Report, Korea—Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/AB/R (adopted Jan. 10, 2000) [hereinafter Korea—Various Measures on Beef].

57 Id., para. 164. The Appellate Body endorsed this formulation of the “necessity” test in EC—Seal Products, supra note 12, paras. 5.169, .214. On “weighing and balancing” beyond the consideration of alternative measures, see Regan, Donald, The Meaning of ‘Necessary’ in GATT Article XX and GATS Article XIV: The Myth of Cost-Benefit Balancing, 6 World Trade Rev. 347 (2007).

58 Appellate Body Report, Korea—Various Measures on Beef, supra note 56, para. 166. This formulation of the “necessity” test originates in GATT Panel Report, United States—Section 337 of the Tariff Act of 1930, para. 5.26, L/6439 (adopted Nov. 7, 1989), GATT B.I.S.D. (36th Supp.) at 345 (1989). The Appellate Body has left open the possibility that the consideration of reasonably available alternatives might not be required in all cases. See Appellate Body Report, EC—Seal Products, supra note 12, para. 5.215 n.1299; Appellate Body Report, U.S.––Tuna II, supra note 53, para. 322 n.647 (in relation to the TBT Agreement, supra note 53, Art. 2.2).

59 E.g., GATT 1994, supra note 1, Arts. I, III; GATS, supra note 1, Arts. II, XVII.

60 Discrimination is implicit in the customs duties and other charges prohibited by Article II of GATT 1994, supra note 1, and the quantitative restrictions prohibited by Article XI:1 of GATT 1994, as by definition, such measures apply only to foreign goods. In India—Additional and Extra-additional Duties on Imports from the United States, para. 158, W T/DS360/AB/R (adopted Nov. 17, 2008), the Appellate Body said that Article II:1(b) of GATT 1994 prohibited certain “other duties and charges” even if these were not discriminatory. It reasoned that such duties and charges may be applied for nonprotectionist purposes and in “situations where there is no domestic production (or even expectations of future domestic production).” It might have been better to say that, because such duties and charges are ipso facto discriminatory, a violation of Article II of GATT 1994 does not depend upon identifying any actual or expected protectionist effects.

61 For this definition of a trade restriction, see Appellate Body Report, China—Measures Related to the Exportation of Various Raw Materials, para. 319, WT/DS394/AB/R (adopted Feb. 22, 2012), para. 319, and Appellate Body Report, U.S.—Tuna II, supra note 53, para. 319.

62 The trade-restrictive and discriminatory effects of a measure are independent and can be, but need not be, cumulative. A tax on alcoholic beverages that disproportionately affects products from one country compared to another is trade restrictive, in that it affects sales of the taxed beverages, and is also discriminatory, in that it does not equally affect all competitive products. By contrast, a domestic regulation that prohibits sales of all like products and that has an equal impact on products regardless of their origin is trade restrictive but not discriminatory. A subsidy granted only to domestic goods or services is discriminatory but not trade restrictive. By way of analogy with this last example, discriminatory trade preferences that have negative effects on the exports of third countries are not considered to “raise barriers” to the trade of those third countries within the meaning of Article XXIV:4 of GATT 1994, supra note 1, or paragraph 3(a) of the Enabling Clause, Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries, GATT B.I.S.D. (26th Supp.) at 203 (1979). I am grateful to James Flett for provoking me to consider these distinctions in more detail.

63 Appellate Body Report, Korea—Various Measures on Beef, supra note 56, para. 163 (footnote omitted).

64 Appellate Body Report, Thailand—Customs and Fiscal Measures on Cigarettes from the Philippines, supra note 21, para. 179.

65 Appellate Body Report, Brazil—Retreaded Tyres, supra note 11, para. 178.

66 See Appellate Body Report, U.S.—Gambling, supra note 10 (compare paragraphs 305 and 309). In Appellate Body Report, EC—Seal Products, supra note 12, para. 5.169, the Appellate Body cited its decision in Korea—Various Measures on Beef, supra note 56, para. 164, for the proposition that the “the trade-restrictiveness of the measure” is a relevant factor, but it omitted to mention that, as noted, supra text accompanying notes 59–63, it was the discriminatory aspects of the measures that were considered important in that case.

67 GATT Panel Report, United States—Section 337 of the Tariff Act of 1930, supra note 58, para. 5.27.

68 Appellate Body Report, Thailand—Customs and Fiscal Measures on Cigarettes from the Philippines, supra note 21, para. 179.

69 Id., para. 177.

70 See supra note 21.

71 I am grateful to Frieder Roessler for insightful discussions on this issue.

72 See supra text accompanying notes 59–60.

73 Article 2.1 of the TBT Agreement, supra note 53, is concerned with the questions whether a measure causes a disparate impact on (or between) foreign products and, if so, whether that disparate impact stems exclusively from a legitimate regulatory distinction, and Article 2.2 states that “technical regulations shall not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment would create.” On the final clause, “taking account of the risks non-fulfilment would create,” see Chris Downes, Worth Shopping Around? Defending Regulatory Autonomy Under the SPS and TBT Agreements, World Trade Rev. (forthcoming; First View at 18–20 (2015)), and Appellate Body Report, United States—Certain Country of Origin Labelling (COOL) Requirements (Recourse to Article 21.5 of the DSU by Canada and Mexico), paras. 5.253–.255, WT/DS384/AB/RW (adopted May 29, 2015).

74 Appellate Body Report, U.S.—Gasoline, supra note 8, at 23.

75 Appellate Body Report, U.S.—Shrimp, supra note 9, para. 150.

76 Appellate Body Report, EC—Seal Products, supra note 12, para. 5.298.

77 Id., para. 5.318.

78 In EC—Seal Products, supra note 12, para. 5.130, the Appellate Body found that the European Union had discriminated against seal products of Canadian and Norwegian origin, respectively, in violation of Article I:1 of GATT 1994, supra note 1, and adopted this reasoning in determining whether there was any discrimination under the chapeau, id., para 5.318. The question of the relevant comparators was discussed in the context of the TBT Agreement, supra note 53, Art. 2.1, in Panel Report, European Communities—Measures Prohibiting the Importation and Marketing of Seal Products, supra note 53, paras. 7.149–.154, and found to be “like,” id., para. 7.594.

79 See supra text accompanying note 74.

80 Panel Report, United States—Standards for Reformulated and Conventional Gasoline, para. 6.16, W T/DS2/R (adopted, as modified, May 20, 1996).

81 Panel Report, Brazil—Measures Affecting Imports of Retreaded Tyres, WT/DS332/R, para. 7.235 (adopted, as modified, Dec. 17, 2007).

82 In China—Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum, WT/DS431/R, para. 7.657 (adopted Aug. 14, 2014) [hereinafter Panel Report, China—Rare Earths], the panel determined that Chinese export duties discriminated between exported and non-exported Chinese “like” products. This determination must be incorrect. On its own terms the chapeau does not prohibit discrimination between products from the same country. More plausibly, the panel might have analyzed the measure in terms of discrimination between Chinese and foreign downstream products using the raw materials as inputs. It did actually take this approach in the (different) context of China’s export quotas, id., paras. 7.833, .959, albeit with metonymic references to “consumers” and “users.”

83 Reciprocal Trade Agreement, U.S.-Can., Art. XII(2), Nov. 17, 1938, 53 Stat. 2348 (emphasis added). In U.S.—Gasoline, supra note 8, at 25 n.46, the Appellate Body referred to a 1927 multilateral treaty and a 1935 bilateral treaty between the same parties and noted that “[t]hese earlier treaties are here noted, not as pertaining to the travaux preparatoires of the General Agreement, but simply to show how in comparable treaties, a particular intent was expressed with words not found in printer’s ink in the General Agreement.”

84 Reciprocal Trade Agreement, U.S.-Can., Art. XII, Nov. 15, 1935, 49 Stat. 3960.

85 In U.S.—Gasoline, supra note 8, at 24 n.46, the Appellate Body contrasted the language of the same 1935 agreement (discrimination in favor of “any third country”) with the wording of GATT 1947 (“countries”) to conclude that, as opposed to the earlier wording, the latter wording was not limited to third countries.

86 On the latter issue, see Ehring, Lothar, De Facto Discrimination in World Trade Law: National and Most Favoured Nation Treatment—or Equal Treatment, 36 J. World Trade 921 (2002).

87 See also infra text accompanying note 126.

88 One may contrast this phrase with, for example, “any other country” under the most-favored-nation obligations in Article I:1 of GATT 1994, supra note 1, and Article II.1 of GATS, supra note 1.

89 Appellate Body Report, EC—Seal Products, supra note 12, paras. 5.300, .317; see also Gaines, supra note 39, at 779; Qin, Julia, Defining Nondiscrimination Under the Law of the World Trade Organization 23 B.U. Int’l L. J. 215, 264 (2005).

90 For a similar analysis, see Gaines, supra note 39, at 779.

91 See Appellate Body Report, U.S.—Tuna II, supra note 53, para. 297. Another implication is that it is irrelevant that a WTO member might be able to take steps reduce the incidence of harm after the measure is adopted.See Panel Report, United States—Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products (Recourse to Article 21.5 of the DSU by Mexico), paras. 7.448–.450, WT/DS381/RW (Apr. 14, 2015; under appeal).

92 See Qin, supra note 89, at 257 n.173.

93 See Article XXIII:1(b) of GATT 1994, supra note 1, read together with Article 26.1 of the Dispute Settlement Understanding, supra note 19. See also GATS, supra note 1, Art. XXIII.3. “Nonviolation” claims are subject to certain other conditions, recently discussed in Panel Report, United States—Certain Country of Origin Labelling (Cool) Requirements (Recourse to Article 21.5 of the DSU by Canada and Mexico), paras. 7.673–.716, WT/DS384/RW (adopted, as modified, May 29, 2015).

94 Agreement on Subsidies and Countervailing Measures, Apr. 15, 1994, WTO Agreement, supra note 1, Annex 1A, 1869 UNTS 14.

95 GATT Panel Report, European Community––Tariff Treatment on Imports of Citrus Products from Certain Countries in the Mediterranean Region, paras. 4.36, 5.1, L/5776 (Feb. 7, 1985).

96 Panel Report, United States—Certain Country of Origin Labelling (COOL) Requirements (Recourse to Article 21.5 of the DSU by Canada and Mexico), supra note 93, para. 7.716.

97 Id., para 7.672.

98 Dispute Settlement Understanding, supra note 19, Art. 26.1; GATS, supra note 1, Art. XXIII.3.

99 In European Communities––Measures Affecting Asbestos and Asbestos-Containing Products, para. 191, WT/DS135/AB/R (adopted Apr. 5, 2001), the Appellate Body held, conversely, that a measure that was justified by Article XX of GATT could be the subject of a “nonviolation” claim. The relevance of the phrase “nothing shall prevent” in Article XX of GATT 1994, supra note 1, was not considered. It is submitted that this phrase should have been considered and that, if it had been considered, the result would have been the opposite.

100 In U.S.––Shrimp itself, the United States offered only a single justification for one of the many discriminatory aspects of its trade-facilitative acts—namely, that the difference in time periods granted to different countries to phase in the use of special technology was justified “by the then undeveloped character of [turtle excluder device] technology, while the shorter period was later made possible by the improvements in that technology.” Appellate Body Report, U.S.—Shrimp, supra note 9, para. 174. This argument was rejected on the facts. Id.

101 Id., para. 165; see also Appellate Body Report, U.S.—Shrimp (Article 21.5—Malaysia), supra note 34, para. 149.

102 Gaines, supra note 39, at 784–85. Even supporters of the Appellate Body’s ruling have accepted that this interpretation contradicts the text of the chapeau. See, e.g., McRae, Donald, GATT Article XX and the WTO Appellate Body, in New Directions in International Economic Law 230 (Bronckers, Marco & Quick, Reinhard eds., 2000).

103 See Qin, supra note 89, at 269.

104 See supra note 100.

105 Appellate Body Report, U.S.—Shrimp, supra note 9, para. 149.

106 Gaines, supra note 39, at 777.

107 Appellate Body Report, Brazil—Retreaded Tyres, supra note 11, para. 226.

108 Id., para. 227.

109 Id., para. 3.

110 See Panel Report, European Communities—Measures Prohibiting the Importation and Marketing of Seal Products, supra note 53, para. 7.261 n.419, citing the UN Declaration on the Rights of Indigenous Peoples, GA Res. 61/295 (Sept. 13, 2007), as well as the International Labour Organization Convention (No. 169) Concerning Indigenous and Tribal Peoples in Independent Countries, June 27, 1989, at http://www.ilo.org/indigenous/Conventions/no169/lang–en/index.htm, and the Charter of the Inuit Circumpolar Council (1980), at http://www.inuitcircumpolar.com/charter–bylaws.html.

111 Panel Report, European Communities—Measures Prohibiting the Importation and Marketing of Seal Products, supra note 53, para 7.275. The Appellate Body accepted this finding in EC—Seal Products, supra note 12, para. 5.320 n.1559.

112 Appellate Body Report, EC—Seal Products, supra note 12, para. 5.321; see also id., para. 5.306.

113 Id., paras. 5.321–.326.

114 Id., para. 5.320; see id., para. 5.338.

115 See supra note 62.

116 Appellate Body Report, European Communities—Conditions for the Granting of Tariff Preferences to Developing Countries, para. 163, WT/DS246/AB/R (adopted Apr. 20, 2004).

117 See Appellate Body Report, United States—Measures Affecting the Production and Sale of Clove Cigarettes, para. 225, WT/DS406/AB/R (adopted Apr. 24, 2012), concerning “legitimate regulatory distinctions” in the TBT Agreement, supra note 53, Art. 2.1. The United States had argued that prohibiting clove cigarettes, but not menthol cigarettes, was justified in order to minimize the health care costs of responding to withdrawal symptoms of “millions” of menthol cigarette smokers and to minimize the risk of a black market in menthol cigarettes. The Appellate Body, not persuaded that these risks would materialize, noted, in effect, that addicted smokers could still smoke regular cigarettes. What is important is that the Appellate Body accepted, at least arguendo, that the United States might have had justifiable reasons for discriminating that had nothing to do with the objective of the measure, even if it then rejected any causal link between the measure and those reasons.

118 See Qin, supra note 89, at 267–69.

119 E.g., Appellate Body Report, U.S.—Gasoline, supra note 8, at 26–27. Here, as elsewhere, the Appellate Body assumed that negotiations would likely have led to a less discriminatory result. See the Appellate Body’s discussions in U.S.—Shrimp, supra note 9, U.S.—Shrimp (Article 21.5—Malaysia), supra note 34, and EC—Seal Products, supra note 12, para. 5.337. The Appellate Body came to the opposite conclusion, however, in U.S.—Gambling, supra note 10, para. 317, in the context of a “necessity” test under GATT 1994, supra note 1, Art. XX(a).

120 Appellate Body Report, U.S.—Shrimp, supra note 9, paras. 163, 165, 166, 171.

121 Appellate Body Report, EC—Seal Products, supra note 12, para. 5.337.

122 Id., para. 5.326; see also id., para. 5.328.

123 Id., para. 5.317.

124 See Appellate Body Report, U.S.—Gasoline, supra note 8, at 25.

125 Appellate Body Report, EC—Seal Products, supra note 12, para. 5.333. Earlier, id., para 5.316, the Appellate Body had said that “we will analyze whether the measure has any discriminatory effects on different indigenous communities.” This language should be treated as metonymic. On no reading of the chapeau is GATT 1994 concerned with discrimination between indigenous communities per se.

126 Likewise, the Appellate Body’s references to “even-handedness” in applying a “legitimate regulatory distinction” under the TBT Agreement, supra note 53, Art. 2.1, might be understood in terms of the “necessity” of the measure’s discriminatory effects for achieving a legitimate objective. See Appellate Body Report, U.S.—Tuna II, supra note 53, para. 216.

127 Appellate Body Report, EC—Seal Products, supra note 12, para. 5.328.

128 Id. (citing Appellate Body Report, U.S.—Shrimp, supra note 9, para. 181).

129 Id., para. 5.520.

130 Appellate Body Report, U.S.—Gambling, supra note 10, para. 309.

131 In Appellate Body Report, Brazil—Retreaded Tyres, supra note 11, para. 232, the Appellate Body considered that Brazil’s rationale for discrimination was arbitrary because it did not relate to the measure’s purpose, and it found the rationale unjustified for the same reason.

132 Appellate Body Report, U.S.—Shrimp, supra note 9, para. 160.

133 Id., paras. 177–181. The Appellate Body added that the practice of U.S. administrative authorities was “contrary to the spirit, if not the letter, of Article X:3 of the GATT 1994,” which provides for the transparent administration of domestic laws and regulations. Id., para. 183. If one reads “if not” in this phrase as inclusive rather than exclusive (seeIf Not, “ Economist (Oct. 23, 2012), at http://www.economist.com/blogs/johnson/2012/10/ambiguity), this ruling was arguably non ultra petita, as none of the parties had raised this obligation at any stage in the proceedings.

134 See supra text accompanying note 127.

135 Id., para. 172. The same point is made in Howse, Robert, The Appellate Body Rulings in the Shrimp/Turtle Case: A New Legal Baseline for the Trade and Environment Debate, 27 Colum. J. Envt’l. L. 491, 507–09 (2002).

136 Appellate Body Report, U.S.—Shrimp (Article 21.5—Malaysia), supra note 34, para. 122.

137 Gaines, supra note 39, at 825.

138 See supra text accompanying notes 83–85; Consolidated Version of the Treaty on the Functioning of the European Union, Art. 36, May 9, 2008, 2008 OJ (C 115) 47; infra note 139 and accompanying text.

139 Preparatory Committee of the International Conference on Trade and Employment, Committee II, Technical Sub-committee, at 7, UN Doc. E/PC/T/C.II/50 (Nov. 13, 1946); Preparatory Committee of the International Conference on Trade and Employment, Committee II, Report of the Technical Sub-committee, at 36, UN Doc. E/PC/T/C.II/54/Rev.1 (Nov. 28, 1946).

140 See supra text accompanying note 47.

141 Panel Report, China—Rare Earths, supra note 82, para. 7.343 (argument made by China). In the context of the WTO, an improper reason would arguably be a measure to protect domestic industry, but there could be other reasons, such as corruption. See Lalanne, & Ledour, (Fr. v. Venez.), 10 R.I.A.A. 17 (Fr.-Venez. Mixed Cl. Comm’n 1903–05).

142 An alternative, but less compelling, interpretation is that this condition relates to measures that are not published. In U.S.—Gasoline, supra note 8, at 24, the Appellate Body said that “disguised” restrictions were not limited to those that were “concealed or unannounced.” In Panel Report, EC—Measures Affecting Asbestos and Products Containing Asbestos, para. 8.234, WT/DS135/R (adopted Apr. 5, 2001), the panel interpreted this statement as meaning that “a measure that was not published would not satisfy the requirements of the second proposition of the introductory clause of Article XX.” The same panel also said, however, id., para 8.236, that “a restriction which formally meets the requirements of article XX(b) will constitute an abuse if such compliance is in fact only a disguise to conceal the pursuit of trade-restrictive objectives.” This view aligns with the interpretation proposed here. By contrast, in Brazil—Retreaded Tyres, supra note 81, para. 7.349, the panel found a “disguised” restriction on trade even though the respondent had not adopted the measure for an improper purpose, and in China—Rare Earths, supra note 82, para. 7.625, the panel found that “a situation of discrimination that is not justified constitutes a disguised restriction on trade.”

143 See supra text accompanying note 46.

144 E.g., Panel Report, China—Rare Earths, supra note 82, paras. 7.168 –.169, 7.191–.193.

* I would like to thank James Flett, Catherine Gascoigne, Joanna Gomula, Simon Lester, Gracia Marín Durán, Odette Murray, Laura Nielsen, Federico Ortino, Joost Pauwelyn, Julia Qin, Frieder Roessler, Marie Wilke, Michelle Zhang, and the editors for their useful comments. Opinions and errors remain my own.

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American Journal of International Law
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