Impact of GATT Rules on Internal Regulations GATT arts XI and III, and the art XX Exceptions

1. Law School International Business Law & Institutions Sol Picciotto Topic 3: Free/Fair Trade: Health & Environment Impact of GATT Rules on Internal Regulations GATT arts XI and III, and the art XX Exceptions Disciplines on national regulations Environmental, & Consumer Protection regulations The WTO’s TBT and SPS Agreements The shift to international standards - harmonization? WTO-compatibility of trade restrictions in MEAs

2. Impact of GATT Rules on Internal Regulations GATT XI: quantitative restriction, includes ban GATT III: NT for taxes and all internal regulations Note Ad Art.III: internal tax/regulation applied to imported product & like domestic product, but applied to imports at border = Internal What is a product regulation? `only if applied to the product as such’ Tuna-Dolphin 5.14 PPMs:processes & production methods basis to restrict imports? or only if identifiable in physical characteristics of product? GATT III: internal charges, laws, regulations & requirements III-1:`should not be applied so as to afford protection to domestic production’ III-2: no charges `in excess of those applied to like domestic products’. `Moreover not … contrary to III-1’ Note Ad III-2: 2nd sentence only if `directly competitive or substitutable’ Japan-Alcohol: this means `like’ in III-2 is narrow, 2nd sentence wider BUT `like’ has variable meaning (accordion)

3. Like Products & NLFT in GATT III-4: `treatment no less favourable than that accorded to like products of national origin: NLFT not same treatment: effective equality may require formally different treatment What is `less favourable treatment’ - impact on trade? NO: US Petroleum Tax - `equal competitive opportunities’ = right to market access Like Product: Japan Alcohol, EC Asbestos III-1 `informs’ III-4: is distinction made `so as to afford protection’? `like’ in III-2 narrower than `directly competitive’ but not necessarily in III-4 Accordion: `like’ can have different meaning in III-4 (Asbestos 96) i.e. wider III-4 `like’ = `competitiveness in marketplace’ Asbestos 99 Border Tax criteria, interrelated (Asbestos 102): (i) physical properties, (ii) end-uses in given market; (iii) consumers’ tastes & habits, perceptions & behaviour; (iv) tariff classification Balance between social & economic conditions of consumption Health (or environmental) effects? If physical property - Asbestos 116 Serious health risk is enough: Concurring statement, Asbestos 149-154

4. Justifications: GATT XX Exceptions Chapeau: not applied in manner which = arbitrary/unjustifiable discrimination between countries where same conditions prevail or disguised trade restriction Which Measures Potentially Valid? (b) `necessary to protect human, animal or plant life or health’ (g) `relating to the conservation of exhaustible natural resources ’ (in conjunction with domestic restrictions) Protection of the environment/ecology/energy efficiency/animal welfare? `natural resources’ includes clean air: Gasoline; living resources: Shrimp WTO Preamble:`sustainable development seeking to protect & preserve the environment’; Marrakesh Decision `noting’ Rio Declaration & Agenda 21, setting up CTE Which environment? Domestic - Foreign (exporting) state’s - Global? `within the jurisdiction of the importing country’ Tuna 5.25-27 legitimate (shared) purpose: Shrimp 135 (referring to WTO Preamble) cf NAFTA: legitimate protection of environment, risk-assessment process

5. Conditions in GATT XX XX(b) necessary = `least trade-restrictive’ measures Thai Cigarettes: labelling? means must be reasonably related to ends: Shrimp 141 XX(g) `relating to’ = primarily aimed at: Gasoline, Shrimp Chapeau: unilateral protection would negate international trade: Tuna 5.27 Balance of rights and obligations: Shrimp 156 Exceptions must be exercised reasonably & in good faith: Shrimp 158 Extra-jurisdictional enforcement unreasonable: Tuna 5.33 Unjustifiable Discrimination between Countries: can’t impose same programme without considering differences: Shrimp 164 no unbending requirement: Shrimp 177 OK to require programme `comparable in effectiveness’ Malaysia-Shrimp 144 Arbitrary = unjustified differential treatment: Gasoline baseline rules Shrimp measures: phase-in, technology transfer Exceptions = `rigorous compliance with … due process’ Shrimp 182 Failure to attempt bilateral/multilateral solution: for enforcement - Gasoline prior to imposing ban - Shrimp 166; with some not all Shrimp 172 serious good faith effort, agreement not required: Malaysia-Shrimp

6. Trade Liberalisation & Regulatory Differences Problem of `Non-Tariff Barriers’ Reduction of Border Barriers makes exporters aware of regulatory differences Growth of regulation e.g. for consumer protection National legislatures formulate protective legislation responding to domestic pressures and to suit domestic industries Examples: catalytic converters; fur from animals caught in leghold traps Hormone-treated Beef 1977-80 stories of effects of hormones in beef 1981 EC adopts partial ban based on Lamming report 1985 Parliament makes it total, upheld by ECJ as response to consumer concerns 1987 US complaint Tokyo Round TBT Code (binding on GATT members accepting it) Establishes TBT Committee; no mention of PPMs US wants reference to TBT Committee, EC to Panel (PPMs outside TBT) US invokes 301 sanctions, moderated when interim measures agreed Uruguay Round agrees TBT and SPS (negotiated in Agriculture Committee)

7. TBT & SPS and their Relation to GATT Additional to GATT - amplify & extend obligations Hormones Panel: SPS applies even if no GATT violation Agreement on Technical Barriers to Trade - TBT Covers Technical Regulations - definition in Annex1: `document which lays down product characteristics’ simple prohibition not a product characteristic: Asbestos 71 prescribing or imposing objective features of a product = a `characteristic’ ibid 72 `or their related processes and production methods’ PPMs must comply with TBT `compliance with which is mandatory’ non-mandatory product & related PPM rule issued by recognised body = standard TBT applies to `all products’ TBT 1.3, excluding: (i) government procurement specifications TBT 1.4 (ii) SPS measures Tech Reg in accordance with relevant international standard rebuttably presumed not to be obstacle to trade: TBT 2.5 SPS-conforming measures presumed to satisfy GATT esp. XXb - SPS 2.4, 3.2

8. Scope & Structure of SPS Covers SPS measures affecting trade SPS 1.1, defined in Annex A, any measure: to protect `within the territory of the member’ animal/plant life/health ag. risks from pests/diseases/disease-causing organisms human/a/p l/h ag. risks from additives/contaminants etc in foods/bevs/feedstuffs human l/h ag. risks from diseases carried by a/p, or spread of pests other damage from entry/spread of pests (e.g. foot & mouth, potato blight, Colorado beetle) Right to take SP measures onlyif not inconsistent with Agreement 2.1 (a) only to extent necessary, (b) based on scientific principles 2.2 (c) no arbitrary/unjustifiable discrimination or disguised trade restriction 2.3 presumed GATT-compliant 2.4 (can other measures also satisfy GATT XX?) Shall be based on international standards where they exist: 3.1- harmonisation `based on’ not `conform to’:Hormones 166; strong & close relation: Sardines 245 if conform to international standard presumed consistent: 3.2 if based on (e.g. partially) complainant must show inconsistency: Hormones 171 BUT different (higher) standard OK if scientifically justified/appropriate: 3.3

9. International Standards & Science in SPS International Standards = Annex A.3 (a) food safety: Codex ; (b)animal health IOE; (c) plant health IPPC (d) other matters: relevant organisations open to MS identified by Committee WTO members shall play full part in intl standards bodies 3.4 Committee shall monitor 3.5, cooperate with other bodies &compile List: 12 Transparency & Notification: 7 & Annex B prompt publication, usually prior to entry into force; Enquiry Points; when international standard doesn’t exist, or proposal not substantially the same, must notify through WTO with reasons at early stage to allow comments Cooperation & Mutual Recognition shall accept equivalence if objectively shown meets appropriate protection level: 4.1 shall on request negotiate Mutual Recognition agreements: 4.2 Different (higher) standard based on scientific justification: 3.3 must comply with art.5 risk assessment: Hormones scientific method not only quantitative: `real world’ Hormones 187 Precautionary Principle? Hormones 124:does not override, partly recognised in 5.7

10. Agreement on Technical Barriers to Trade - TBT NT & MFN for imported products in respect of technical regulations affecting products, mandatory, product characteristics & related PPMs; includes terminology, packaging &labelling covers prohibition if negative characteristic of all products: Asbestos TBT 2.2 must not be prepared/adopted/applied to create trade barrier = no more trade restrictive than necessary to fulfil legitimate objective (e.g.) national security; preventing deceptive practices; protecting human health/safety, animal/plant life/health, or the environment. assessing risk: scientific info.; related technology; intended end-uses International Standards: 2.4 if they exist/are imminent shall be used `as a basis’ (cf Hormones 162-5: harmonisation is future aspiration); Sardines:not contradict unless ineffective/inappropriate for legitimate objective If objective legitimate & in accordance w international standard, rebuttably presumed valid: 2.5 Standard = non-mandatory rules document approved by recognised body Annex 1.2 International Body = open to at least all WTO members: Annex 1.4 WTO members shall play full part in international standards bodies: 2.6

11. TBT Procedures Regn. which may have significant effect on trade must be justified on request: 2.5 If no international standard, or Regulation not in accordance with one: 2.9 must publish in advance & notify via Secretariat; allow time for and take into accounts comments from other Member States Enquiry Points for government regulations & standards 101, & NGOs’ 10.3 Notifications in English/French/Spanish by developed countries 10.5 Forms & Procedures for Regulations & Standards: performance rather than design based where possible: 2.8 Code of Good Practice for National & International Standards Bodies: Annex 3 positive conformity assessment must comply with NT & necessity test: 5, + procedures shall be based on international guidelines where possible 5.4 conformity procedure standards for central government: 5.2, local govt 7, NGOs 8 Cooperation & Mutual Recognition: positive consideration to recognition of equivalence: 2.7 (=mutual recognition) shall accept conformity assessment results if equivalent: 6.1

12. WTO-Compatibility of MEAs MEAs = Multilateral Environmental Agreements, may entail trade restrictions e.g. CITES, Montreal Ozone Protocol, Basel Trans-Boundary-Waste, Nuclear NPT problem if conflicting obligations = compliance with one entails violation of other Treaty Interpretation Rules: Vienna Convention art.30 for `treaties relating to same subject-matter’ (i) 30.2: Explicit deference to earlier/later treaty, e.g. NAFTA 104: if `inconsistency’ preference given to listed MEAs, e.g. CITES Inter-American Sea-Turtle Conv.: parties shall comply with WTO (ii) 30.3&4: later-in-time treaty prevails, between states parties to both treaties is GATT dated 1947 or 1994? (iii) 30.4b: if both only parties to one, treaty which binds both governs so WTO likely to override conflicting MEA with smaller membership General Interpretation rule: generalia specialibus non derogat:general does not override specific which is specific? specialis usually elaboration of earlier treaty; Hudec: MEA Example: WTO member not party to MEA (eg refusing to join fish conservation) WTO IX.3&5, GATT XX.5 Waiver procedure

13. Protocol of Convention on Biological Diversity Cartagena Protocol - agreed Montreal Feb 2000, still provisional: website regulates transboundary movement (TBM) of living modified organisms (LMO) LMO=living organism with novel combination of genetic material via modern biotech e.g. bio-engineered seeds, plants, veg/fruit (tomatoes, soya, cassava); products containing dead GMOs not covered (processed foods, vaccines etc) TBM=between Parties (US not party, though active in drafting!) aims to protect against `adverse effects on conservation and sustainable use of biological diversity, taking also into account risks to human health’ Preamble: trade & environment agreements should be supportive; this Protocol shall not be interpreted as implying change in rights/obligations under existing agreements; above recital not intended to subordinate Protocol to other agreements Objective: in accordance with Precautionary Principle of Rio 15

14. Procedures Advanced Informed Agreement for first TBM of LMO for intentional introduction to environment of importing state not if intended for direct use as food/feed/for processing Exporter notifies within 90 days Importing State decides: approve/prohibit/info: 8-10 Decision shall be in accordance with Risk Assessment done in scientific manner: 15 Lack of scientific certainty shall not prevent appropriate decision to avoid/minimize potential adverse effects Biosafety Clearing House (BCH) LMOs for direct use as food/feed/for processing: 11 Approvals for Placing on Market notified to BCH Importing State establishes Domestic Framework consistent with objectives of Protocol to regulate importation Packaging art. 18: LMOs for food/feed/processing shall be clearly identified as `may contain’ LMOs & not intended for direct introduction to environment Risk Management: appropriate mechanism - art.16 WTO issues: (i) between BDC parties: could exporter complain of import ban allowed by BDC? (ii) is `may contain’ LMO an international standard, so not WTO trade restriction?