As mentioned, historically, it was considered that taking into account the “process and production method” of a given item would usually result in a WTO-inconsistent measure.3 In other words, unless the non-respect of human rights standards or environmental norms could be identified in the physical characteristics of the final product, no distinction could be made between this product and a “virtuous” one.
A. Article XX GATT: Historical Balance and Coherence
The first category of justification to a discrimination between two products based on a NTC can be found in article XX of the GATT. This article embodies the
“General Exceptions” that can justify a violation of another part of the Agreement.
Indeed, this article lays down an exhaustive list of categories of NTCs that could justify a trade restriction. A government taking such measures first needs to demonstrate that it passes the test of one of these subparagraphs. Among these, we will briefly look at articles XX(a), XX(b), XX(d) and XX(g) that refer to the right of governments to protect morality, health, environment and other domestic policies that are WTO consistent.
Between the entry into force of the GATT, in 1948, and its integration into the WTO, in 1995, the case law surrounding article XX was particularly restrictive. In the US – Tuna GATT panel reports, it was decided that article XX of the GATT could not be used as a justification for the protection of values outside one Member’s jurisdiction unless an international treaty existed and dealt with the possible trade restrictions that could be imposed to protect the health of citizens.4 More recent case law has changed the approach.
As the first step of an analysis, such a priori WTO-inconsistent measures should be demonstrated to be “necessary”. This “necessity test” entails a weighing and balancing of the importance of the value at stake, the contribution of the measure to the protection of this value, and the trade restrictiveness of the measure.5 Further, no less trade-restrictive and reasonably available alternative measure
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should exist.6 In these circumstances, a measure will be deemed “necessary”. This test is a requirement applicable to each of the three subparagraphs. However, they all address different substantive issues.
Article XX(a) focuses on measures necessary to the protection of public morals.
That is, the “standards of right and wrong conduct maintained by or on behalf of a community or nation including measure for public order preserving fundamental interests of a society, as reflected in public policy and law”. 7The exact scope of this exception is unclear, but still quite broad. Indeed, the AB considered in 2014 that public concerns against animal cruelty could fit into this subparagraph.8 This means that various NTCs ranging from human rights to cultural diversity and preservation could arguably also be justified under this provision.
In turn, article XX(b) deals with a slightly different set of issues, although some overlap with the previous subparagraph is possible. Here, governments can justify restrictions as long as they are necessary to protect “human, animal or plant life or health”. An open interpretation could lead to the inclusion of many non-trade concerns into this provision. For instance, low labour standards raise the question of their impact on the health (or even life9) of the workers. Similarly, pollution levels could be taken into account.10
Article XX(d) plays a different role. Indeed, rather than explicitly lay out a specific value that can be protected though trade restrictions, the subparagraph offers a more general approach. If allows for restrictions necessary to enforce other laws, when these are otherwise compliant with WTO rules. For instance, should a Member enact a law aiming at the avoidance of certain criminal activities,11 other measures taken to ensure compliance with it could thus be WTO-consistent. It remains to be seen how wide the scope of this provision is. For instance, one could wonder if trade restrictions stemming from laws aiming at the protection of the cultural heritage could fall under subparagraph XX(d). The respective importance of the values protected will weigh differently on the “necessity test” mentioned
should exist.6 In these circumstances, a measure will be deemed “necessary”. This test is a requirement applicable to each of the three subparagraphs. However, they all address different substantive issues.
Article XX(a) focuses on measures necessary to the protection of public morals.
That is, the “standards of right and wrong conduct maintained by or on behalf of a community or nation including measure for public order preserving fundamental interests of a society, as reflected in public policy and law”. 7The exact scope of this exception is unclear, but still quite broad. Indeed, the AB considered in 2014 that public concerns against animal cruelty could fit into this subparagraph.8 This means that various NTCs ranging from human rights to cultural diversity and preservation could arguably also be justified under this provision.
In turn, article XX(b) deals with a slightly different set of issues, although some overlap with the previous subparagraph is possible. Here, governments can justify restrictions as long as they are necessary to protect “human, animal or plant life or health”. An open interpretation could lead to the inclusion of many non-trade concerns into this provision. For instance, low labour standards raise the question of their impact on the health (or even life9) of the workers. Similarly, pollution levels could be taken into account.10
Article XX(d) plays a different role. Indeed, rather than explicitly lay out a specific value that can be protected though trade restrictions, the subparagraph offers a more general approach. If allows for restrictions necessary to enforce other laws, when these are otherwise compliant with WTO rules. For instance, should a Member enact a law aiming at the avoidance of certain criminal activities,11 other measures taken to ensure compliance with it could thus be WTO-consistent. It remains to be seen how wide the scope of this provision is. For instance, one could wonder if trade restrictions stemming from laws aiming at the protection of the cultural heritage could fall under subparagraph XX(d). The respective importance of the values protected will weigh differently on the “necessity test” mentioned
Turning to paragraph XX(g), the “necessity test” is replaced by the requirement a measure be “relat[ed] to”. This requires “a close and genuine relationship of ends and means between that measure and the conservation objective of the Member maintaining the measure”.12 While not identical to the test of “necessity”, there is still a close proximity between the notions.13 Members can restrict trade in order to conserve “exhaustible natural resources”. While this notion was likely understood as relating to minerals such as oil or coal in 1947, in WTO law, it has been interpreted as including living resources such as turtles into it, thereby allowing for their protection through trade restrictions.14 Since “clean air” was also considered an exhaustible natural resource,15 it seems that a clean and temperate environment would also fit into this provision.
Such measures must in addition be applied in good faith under the so-called chapeau of article XX GATT.16 In essence, the chapeau is a test of the good faith of the Member enacting a measure.17 It serves to determine whether the measure is truly aimed at the protection of the value at stake or if it was a protectionist decision under a guise, or even a violation of GATT provisions for wholly other reasons than those laid out in the subparagraph. The text of the chapeau prohibits
“arbitrary or unjustifiable discrimination between countries where the same conditions prevail”, as well as “disguised restrictions on international trade”.
While the exact delineation of each of these conditions is blurry,18 they nevertheless cover a wide range of possible issues. For instance, in Brazil – Retreaded Tyres, the Appellate Body ruled that Brazil could legitimately restrict the importation of a certain type of tyres for health purposes, but its measure was not coherent. As a matter of fact, Brazil was prohibiting importation from anywhere
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but its MERCOSUR partners. This was considered to be an arbitrary or unjustifiable discrimination.19
All in all, the current interpretation of article XX leaves wide-ranging flexibilities to Members in their approach to non-trade concerns. However, and this is where the problem might lie, the measures enacted by the governments need be coherent and applied in good faith.