A call for coherence in international law : praises for the prohibition against "Clinical Isolation" in WTO dispute settlement

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A call for coherence in international law : praises for the prohibition against "Clinical Isolation" in WTO dispute settlement

MARCEAU, Gabrielle Zoe

MARCEAU, Gabrielle Zoe. A call for coherence in international law : praises for the prohibition against "Clinical Isolation" in WTO dispute settlement. Journal of World Trade , 1999, vol. 33, no. 5, p. 87-152

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Journal ofWorld Trade 33(5):R7-152, 1999.

© 1999 KIU11Jer Lm l' Iutemational. Prhrted ill Grea/ Britain

A Call for Coherence in International Law Fraises for the Prohibition Against "Clinical Isolation"

in WTO Dispute Seulement

Gabrielle MARCEAU*


Interdependencics betvveen States, on alllcvels are rapidly increasing. Thus, the thrusts of policy and legal instruments that States arc enacting are subject to doser examination and more stringent challenges not only within each Statc but also betvveen States. This calls for grcater coherence between various policies adopted by States and the legal regimes that sustain them. This need for greater coherence exists withîn the multilateral trade system (a specialized sub-system oflaw) as well as betwecn the multilateral trade system and othcr sub-systems of international law and with principles and rules of general international law and institutions. Basic rules and principles of treaty interpretation, such as the presumption against conflicts and the necessity for effective interpretation, are expressions of this need for a coherent approach to international law matters generally.

The pressing cali for States to evolve within the parameters for "sustainable dcvelopment" is another expression of this need for greater co-ordination and coherence between trade, development and environment policies. If the initial rationale for trade liberalization was peace and economie growth, sustainable devclopment is about ensuring continued peacc and the effective well-bcing of future generations. This article focusses the discussions on the cali for coherence between the areas of trade, development and environment as part of this broader concen1 for sustainable developrnent in the context of the World Trade Organization (WTO) dispute scttlement.

Incorporated into the prcamble of the Agreement Establishing the World Trade Organization, the concept of sustainable development, 1 as defined in the Rio Declaration2 and Agenda 21,3 c1nphasizes both environmental protection and the


Ph. D. The author completee! th.i5 article whilst lecturing at Monash University, Australia, in the sununer of 1999. The opinions expressed in this article are strict! y persona!. The au thor is especially grateful to Matthew Stilwcll for his as~istance, abundant comments, and our numerous discussions on many aspects of this article.

Thanks also go to Laurence Boisson-de Chazournes, Eric Canal-Forgues, Mary Footcr, Fiona Mcklow, Litizia Rascella and Witold T)tmowskî for thcir comment.> and inputs on previom drafh of this article. Ali mistakes arc the author's on1y.

1 Marrake:.h Agreement Estahlishing the World Trade Organization (hereinafter WTO Agreement) 131 LL.M. 1125 {1994).

2 Rio Declaration on Environment and Dcvclopment, 14 June 1Y92, UN. Doc. A/C:ONE151/5/Rev.l (19Y2{, reprintcd in 31 l.L.M. B74 (1992) (hereinafter Rio Declaration). _

Ag;enda 21, UN. Conference on Envîronmcnt and Dcvclopment (UNCED), Anncx Il, UN. Doc. A/

CONF.151/26/Rev.l (1 992) (hcreinafter Agenda 21).



eradication of poverty. 4 Many people are challenging the existing General Agreement on Tariffs and Trade (GATT)/WTO system as being impermeable to this need for sustaînable developmcnt. Although arguably insuilicient and outdated,. the old basic provisions of Article XX were, and still are, a recognition that tensions may exist between 1narket access rights and other legitinnte policies (such as environment) and constitute a call for some coherent approach to resolving these tensions.

The issue ofWTO trade disputes involving cnvironmental policies is complex, as it subsumes many diverse but interrelated aspects of human, animal and plant surVival together with the urgency for a far-reaching solution to the allcviation of poverty and human economie misery. For a variety of reasons, many countries have resisted further consideration of envîronmental issues at the WTO. Con cern has be en raised tha~

environmental standards tnay be used as a form of disguised protectionism. Developing countrics, in particular, note that bigh, and son1ctimes discriminatory,

standards reduce market access and impose costs that affect their devclopment. This, in turn, may reduce the resources available to implement enforcc strong national cnvironmental policies. While these concerns are valid, spectre of protectionism should not undcrn1ine efforts to ncgotiate provisions increase the coherence of trade, develop1ncrlt and environmental laws and po,ncles:, called for by the WTO dispute setdement mechanism.

Section II of this article discusses environment-relatcd disputes under both the GATT system and the WTO, and focusles on the interpretation and reach of XX of GATT. The new WTO case law on Article XX seems to recognize the for WTO Members to addrcss and collaborate to dcfine further criteria and paratnetersz of our sustainable developmcnt.

Section III exanllnes the challenge posed to the WTO dispute setdement m<,crtallisrrt it the event that WTO Members take no further negotiated action to address

envirornnentü issues at the WTO. It raises argmnents and counter-arguments for public international law to interpret WTO rights and obligations, and examines ho,w ,existittg mLÙtilateral environmental agreetnents (MEAs) and principles of general or custOJtnaJo/\

international law may influence the Panels and the Appellate Body's interpretation of WTO enviromnental provisions. Here, recent WTO Appellate Body decisions incluclill!f\

Gasoline,5 Hormones/' Computer Equipment,7 Poultrl and Shriml are discussed.

4 A~ rccognized by the Appcllatc Body in S!Jtimp, as note 9 helow; para. 129, footnote 107 "this ::··7 ·.:·::.;;"

generally accepted as integrating economie and social development and cnviromnental protection". See

Sustainab!e Dew/opwent: Ceneml Ru/es VàHIS Spedfic 0/Jligations in W Lang (ed.) Srrstainable Deve/opment ~>~1>>fe>'>>wû,m!:'!~ Ù>u World Commi<;.~ion on Environment and Development (1987): Our Common FrJtwr (Oxford: Oxford University

5 Appclbte Body Report on United States-Standards for Riformu/ated m~d C01wentioua/ Gaso!i11C, ,dc>pté~Lf 20 May 1996 (WT/DS2) (hereinafter Gaso/ine).

6 Appellatc Body Report on Europea11 Co!IHIIIIIIÎIÎes-iVIeasures Conœmins lvfeat aud JV[eat P"'du<ij;}(t5

(Hormones), adopted 13 February 1 '::l'::IH (WT /DS26, 48) (hereinaftcr Hormoues).

7 Appellate Body Report on European Comnmnities-Customs Ciassijlcation if Certain Comprrter Eq>ûP''"""·'' adopted 5 june 1998 (WT /OS62, 67, 68) (hcrcinafter Computer Equipment).

H Appcllate Body Report on European Commnnities-A.feasJ<res 4ffectins the Importation if Certain PmdHcfs, adopted 23 July 1998 (WT/DS69) (hereinafter Pou!try).

9 Appellate Body Report on United States-Imporl Prohibition if Certain Shrimp and Slnimp Product>, 6 Novemher 1998 (hereinafter Shrimp).



Finally, in section IV, there is an examination of the different legal instruments that could be negotiated by WTO Members-should they so desire-with a view to reducing the potential for disputes involving environmental policies. Proposais to address procedural and substantive matters are suggested in brief.

By way of qualification, the field of trade and environ mentis broad and complex.

It is not the goal of this article to assess the strengths and weakness of the many proposais put forward at the WTO Committee on Trade and Environ ment (CTE) or elsewherc. Nor is it intended that the possible implications of further including environmental considerations into the multilateral trading system be examined.

Rather, acknowledging that sorne WTO Members have identified the environment as an issue of in'lportance, the purpose of this article is to describe the evolution of the GA TT and WTO case law on trade and the environment. The aim is to identify how non-WTO international law could be used in future WTO disputes to improve coherence between the implementation of trade and cnvironment policies; and to identifY WTO mecbanism1 available to WTO Members sbould they collectively consider that further efforts are required to cnsure coherence in response to trade and environmental tensions at the WTO.


Whilc sorne provisions of the Results of the Uruguay Round Multilateral Trade Negotiations (including the WTO agreements) deal explicitly or implicitly with environment, none have be en so widely debated as Article XX of the GA TT. 10 This provision pro vides an exception to the core GA TT obligations and, th us, forms a crucial interface between the rntlltilateral trading system and other important societal policy objectives. Article XX recognizes the tension that sometünes exists betwecn, on the one hand, the tnultilateral trading system, which promotes a liberal econmnic orcier, and, on the other hand, the govermnent's right to regulate other social, developmental and environmental policies. This tension finds expression in a number of WTO agreetnents, including the Agreement on Sanitary and Phytosanitary Measures (SPS Agreement), the Agreen'lent on Technical Barriers to Trade (TBT Agreement), the Agreement on Agriculture, the GATT, and in trade disputes involving hcalth, environmental and developrnental considerations. ln each of these areas, key policy considerations are therefore how to strike a balance between the need for open markets and the need to regulate markets to promote other legitimatc objectives, and how to ensure son'le coherence betwecn States' varions policies.

111 References to hcalth and the environment exist in other WTO Agreements, including the TBT Agreement (Prearnblc and Art_ 2.2); the SPS Agreement; the GATS (Art. XIV); the TRIPS Agreement (Al:t.

27.2); and the preamble to the WTO Agreement). This article dues not examine each ofthe>e environmental and health provisions. However, the arguments made in relation to the general GATT exception in Art. XX coulù be tnade, with variations, in relation to these other provisions.



This section provides an overview of the main GA TT disciplines and Article XX_

exceptions. We discuss the main GATT trade and environment disputes, noting that, historically, GATT panels have adopted a rather narrow interpretation of Article XX_

and a restrictive use of outside sources of law to interpret GATT obligations. It concludcs by discussing the evolution in jurisprudence that occurred with the establishment of the WTO and its powerful dispute settlement mechanism in 1995.

Since 1995, the WTO's Appellatc Body has made a number of important contributions to trade and environment disputes. First, the Appellate Body has ensured th at the WTO system remains "connected" with the broader body of international law by acknowledging that WTO agreements cannat be interpreted in "clinical isolation"

of public international law.11 Second, in two cases-Gasoline and Shrimp-it has adoptcd a more tcxtual and progressive approach to the Article XX exceptions.


The starting point for any discussion of trade and environment disputes must be the provisions of the GATT 1947. After the Great Depression and the Second World War, the GATT sought to rcduce tariff measures in order to increase trade between countries, enhancc economie wclfare and prmnotc peace. Under Article I of the GATT, tarifE arc reduced through reciprocal concessions apphed m a non"- discriminatory manncr which independcnt of the origin of the goods (the "most- favourcd-nation" (MFN) obligation). This obligation and the Article II

that tariffs must not cxceed negotiated bound rates, constitute PartI of the GATT.

ensure that these Part I obligations are not evaded, other rclated obligations (mclt!di!1g the "national treati!lent" obligation, which prohibits countries fi-om treating inlp<orted products in any less f1.vourable a manner than domestic like products, and the ban O.J?.

imposing quantitative restrictions su ch as trade bans and quotas) are included in Part of the GATT."

In accordance with thesc obligations, countrics must not discriminate betweert products itnportcd from different countries (the MFN principle), or betvveen in1portèd and domestically produced products (national treatment), where these products ~-·· < ••·3 similar or "likc". A fundamcntal issue th en, and one that is at the heart of the trade and cnvironment debate, is to dctcrnüne what constitutcs "1ike" products, as it is only

11 ln addition, in their decisions, Panel> and the Appellate Body have acknowlcdged that inl''l'"''"''"•

principles su ch as Îll d11/!io l!litius and other general principles of international law su ch as the one de droit may be relevant to the interpretation ofWTO agreement>.

12 The prohibition against quantitative restrictions is a reflection that tarifE are the GATT's bocdet•c•,ci:B\

protection "of choice". Qumtitativc restrictions impose absolute limits on imports, wlùle tarifE do

contrast to MFN tarifE, which permit the mmt efficient competitor to supply import>. quantitative '"td<:tic~n•{, usually have a trade-distorting effect, their allocation can be problematic and their administration rnay not tramparent. Art. XI: 1 st~-\tes:

"1. No prohibitions or restrictions other than duties, taxes or othcr charges, whether made effcct;iv•~,~~;~:;;;;:

quotas, import or export licenscs, or othcr meast1res, >hall be institutcd or maintaincd by any party on the importation of any product of the terri tory of any other contracting party or on the or sale for export of any product destiiH~d for the tcrritory of any other contracting party.''



where two products arc "like" dut the MFN and national treatment obligations will apply.

These obligations are subject to an exception fmmd in Article XX of the GATT.

This Article contains a list of domestic poli ci es that may qualify for an exception to the rules mentioned above. Although Article XX does not mention "protection of the environment" explicitly-it was drafted before environmcntal considerations had reached global proportions-it does rccognizc that sorne environmental policies nuy indeed clash with specifie tradc rules. The relevant provisions of Article XX statc:

"General Exceptions

Subject to the rcquircment that such measures are not applied in a manncr which would constitute a nwans of arbitrary or unjustifiable discrimination between countrics where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreem_ent shall be construed to prevent the adoption or enforcement by any contracting party of measures:

(b) necessary to protect human, animal or plant !ife or hcalth;

(!?) relating to the conservation of exhaustiblc natural resources if such measures arc made effective in conjunction with restrictions on domestic production or consumption;

As an exception to the substantive GATT obligations, Article XX provides the focal point for many environment-related trade disputes.

As noted, one important issue in thcse disputes arises from the concept of "like"

products and fi·om the use of environmcntal regulations designed to prmnote environmentally sound production and consumption. Much environmental policy is based on the concept of life-cyc1e analysis, which exhorts govcrnments and consurners to reduce envîronmental impacts at each stage of a product's life-cycle: production, use and consumption, and disposal. Environmental labels, for example, seek to provide consmners with information about the way products are produced. Voluntary labclling schemes inform consumers of environm_entally friendly products, and cmnpulsoty government-sponsored schemes alert consumcrs to products that involve significant impacts on health or the environmcnt. Similarly, in son1e cases, importing countries may ban products on the basis that they involve risks to health in the importing country, or are produccd by the exporting country in a way that is considered by the importing countty to be environmentally unsound. While these policies may be regarded as a legitimate environmental policy, they may also give rise to tensions bet\:veen trading partners. In the context of the GATT, this issue arises initially undcr Article III and, inevitably, ends upas an issue to be resolved under Article XX.

This section examines the GATT case law and, in particular, how the Tww cases treatcd regulations that discrimînated between products on the basîs ofhow they wcrc proùucedY The following section examines how, in the context of the WTO, this jmisprudence has been developed by the Appcllate Body.

u U11ited Srates~Hestrictioi/S 011 Imports ofTtnra, 3 Scptcmber 1991, non adopted, BISD 39S/155 (hereinafter 1i11w l); United States·-Hestrirtioi/S 011 Imports l!fTima, 10Junc 1994, non aùopted, DS 29/R (hcrcinaftcr Ti1na Il).




A number of cases under the GATT (including Salmon-Herring,14 Thai Cigarette515

and Tuna-Dolphin) have considered the Article XX exceptions. In these cases, the GA TT panels have generally adopted fairly conservative interpretations of the Article XX exceptions. Moreover, in general, they have been reluctant to use external sources of law, including other treatîes and principles of international law, to assist in the interpretation of GA TT provisions.

The unadopted panel decisions in Tu na I and Tu na II addrcssed the vexed process and production method (PPM) issue when they examined the United States' ban tuna in1ports caught by mcthods that endangercd dolphins. In Tuna I, the Panel determined that because the GATT is conccrned with trade in products, any regulatoty distinction not reflected in the physical charactcristics of products (for examplc, a distinction based on the manner in which tuna was caught) was incompatible with Article Ill of the GATT. It stated:

"Article III:4 caUs for a comparison of the treatmcnt of imported tuna as a pro du ct with that of domestic tuna as a product. Regulations govcrning the taking of dolphins incidental ta the taking of tu na could not possibly affect tuna as a product . "16

Under the GATT, panels were examining whether the "violation" of Articles or XI was indecd "necessary" pursuant to Article XX(b) or "primarily aimed at the conservation of natural resources" pm·suant to Article XX(g). Finally, in cxamining the consistency of the US mcasure with Article XX(b) the Tu na II Panel concluded that:

"measures taken sa as to force other countrics to change theîr poli ci es, and tint were errw:lV<' ,''l only if su ch changes occurred, could not be prîmarily aimcd either at the conservation of exhaustiblc natural resource, or at renderîng effective restrictions on domestîc production or consumption, în the meaning of Article XX(g)."17

14 Canada-JV!ea.wres A_ffectin,g Exports if Unproœssed Herring and Salmon, adopted 22 MJrch 1 (}88, BISD 98 (hcrcinaftcr Salmon-HerriiiS). ln Sa/moH-1-Ierrillf:, a Panel upheld the United States' daim th~t Canada's ban unprocesseJ herring and salmon cxports vio!ated the prohibition on quantitative restrictions in Art. X!.l GATT and rejected Canada's argument that, as part of a fisheries management programme, Ît> export ban was permîssible und er Art. XX.

15 Thai/and-Restrictions 011 Importatio11 qf and Intemational Taxes 011 Cigarettes, adopted 7 Novcmber 1990, BISD 37 S/200-228 (hercinaftcr T/iai Cigarettes). In Thai Cigarettes, a P~mel uphcld a challenge by the Unîted States tu Thailand's restrictions on the import of cigarette<; under Art. XI:l of the GA Tf. It also determined Thailand's excise, business and municipal taxes on cigarettes were inconsistent with the national treatment obligations under Arts III:l and III:2 and that the trade restriction could not be justified under Art. XX(b) as measure "necessary to protect human ... life or health". The Panel noted that the requirement of""'""'''"'"

would only be met if "there \Vas no alternative measure consistent with the General Agreement, or ineonsistent with it, which Thailand could reasonably be expected to employ to achieve its health nol;cv >i' objectives". Id., at para. 75. The Panel wcnt on to note that (id., at para. 77):

"A non-discriminatory regulation irnplementcd on a national basis in accordance with Article III:4

complete disclosure of ingredients, couplcd with a ban on unhcalthy mbstances, would be an ~t<em'ti''e ,' ~ consistent vvith the General Agreement. The Panel considcred that Thailand could reasonably be expecteii to take such measures to address the quality-related policy objective it now pursucs through an import ban on all cigarettes whatevcr their ingredients."

See also United States-Section 337 of the 'Jin{ff Act of 1930, adopted 7 Novembcr 1989, BISD 365/345, at 5.26.

16 Tu11a I, at parrt. 5.15.

Ttma II, at para. 5.27.



Aftcr the 'l'un a cases, it became accepteù by some that Article III did not pennit the GATT contracting parties to adopt regulations tlut distingnish bet\veen products on the basis of how these goods were produced (PPMs), rather than on the basis of their physical characteristics. For some, such PPM rcgulatory distinctions could not even be covercd by the exceptions of Article XX, as it would be vîrtually impossible for a country to prove that the violation of Article III-through the rcquirement of policy conformity-v.ras the on.ly solution for a country to ensnre the respect of such an environmental policy.

In addition, the GATT panels have becn reluctant to use external sources of law, including othcr treaties and principles of international law, to assist in the interpretation of the GATT provisions. The Panel, in the second of the two 'J'una- Dolphin cases, declined to use international cnvironmental treatics to intcrpret Article XX. It noted:

"that the parties based many of their arguments on the location of the exhaustible natural resource in Article XX(g) on cnvironrnental and trade treaties other tlun th~.: General Agreement. However, it was first of ail necessary to determine the extent to which these treaties

\Vere relevant to the interpretation of the text of the General Agreement. "lll

It went on to note that:

"the Vi enna Convention provides for a general rule of interpretation (Article 3 J) and a supplementaq me ans of interpretation (Article 32). The Panel first examined whether, und er the general rule of interpretation of the Vien na Convention, the treaties referred to might be ta ken into account for the pm·poses of interpreting the General Agreement. The general rule provides that 'any subsequent agreement bctween the parties regarding the interpretation of the trcaty or the application of its provisions' is one of the elements relevant to the interpretation of a treaty. However the Panel observed that the agreements citee! by the parties to the dispute were bilateral or plurilateral agreements that were not concluded among the contracting parties to the General Agreement, and that they did not apply to the interpretation of the General Agreement or the application of its provisions. Indeed, many of the treaties referred to could not have do ne so, sin ce they \Vere concluded pr:ior to the negotiation of the General Agreement. The Panel also observed that under the general rule of interpretation in the Vi enna Convention account should be taken of 'any subsequent practice in the application of the treaty which established the agreement of the parties re garding its interpretation'.

Hm:~,•ever, the Panelnoted that practice under the bilateral and plurilateral treaties cited could not be taken as practice under the General Agreement, and therefûre could not affect the interpretation ofit. The Panel thcrefore found that undcr the general n1k contained in Article 31 of the Vienna Convention, these treaties were not relevant as a primat)' means of interpretation of the tcxt of the General Agrcement."19

With the creation of the WTO on 1 January 1995, this jurisprudence, both in relation to the interpretation of Article XX and to the use of extcnul sources oflavv to intcrprct WTO obligations, was to evolve significantly.

tR 'Iiow II, at parJ. 5 .18.

1~ Tuna II, atpna. ::..·19.




ln 1994, the WTO Agreement integrated the GATT, the Tokyo Round Agreements and the Uruguay Round Agreements into one institutional and legal hamework. The text of the old GATT now constitutes the main component of what is called the GATT 1994, which is itself part of the WTO Agreement.

The creation of the WTO brought with it a change in approach to trade and environment mattcrs. A number of fi1ctors encouraged this change. The first was that negotiators of the WTO agreements replaced the reference in the GATT Preamble thar encouraged "full use of the vvorld's resources", with a reference in the WTO Agreement Preamblc to "optimal use of the world's resources in accordance with the objective of sustainable development". As notee\ by the Appellate Body, this change in orientation must "add colour, texture and shading to [thel interpretation of the agreements annexee\ to the lif/TO A,Rrccment" (emphasis as original).20 Second, the Uruguay Round negotiations expanded the scope of the multilateral trading system to enver intellectual property and services and added new disciplines over national hnvs in a number of areas, including health and technical regulations. This, in turn, incrcased the need for a careful bJbnce to be struck between WTO disciplines and other nationallaws and policies. Thini, the Uruguay Round ncgotiations occurred alongside the United Nations Conference on Environ ment and Development (UNCED), which retlected growing international concern about the increasing and unsustaînablc impacts of hu man society on the Earth 's ecosystems and growing inequality in the patterns of devclopment. Fourth, Ministers at Marrakesh agreed a Decision on Trade and Environment, in which they took note of the Rio Declaration on Environment and Development and Agenda 21, and resolved to establish a Committee on Trade and Environmcnt to, inter alia, "make appropriate recommendations on \Vhethcr any modifications to the multilateral trading system are required" to promote snstainable development. Finally, the WTO Agreement included a new Understanding on Rules and Procedures Governing the Settlen-i'ent of Disputes (DSU), which establishcd a comprehensive and powerful dispute scttlcment system, inclnding a Standing Appellate Body to adjtldicate trade disputes. The l)SU replaced the old GATT systen1 of dispute settlcment, which requircd consensus nf ali contracting parties before a decision was adoptee\, with a "reversed or negative consensus" rule, in which decisions are adopted unlcss all WTO Membcrs decide by consensus not to adopt. Conscquently, decisions of Panels and the Appellate Body are effectivcly binding and the WTO system plays a mnch greater role in interpreting and devcloping international law thJn dispute scttlcment did under the GATT. The multilateral trading system's expanded mandate and "bindingness", in tu rn, elevated the nced for coherence bet\vccn its rulcs and those of other national, regional and international systems. Arguably, these developments influenced the ensuing WTO jurisprudence on trade and the

2" .S/trimp, at p~1ra. '153.



environment, cmnmencing with the first case to be considered under the new WTO system: the Gasohne Case.

1. The Gasoline Case

Gasoline involvcd a challenge by Venezuela and Brazil to a US domestic regulation adoptcd under the Clean Air Act, on the basis that this regulation imposed more stringent standards against imported gasoline than against US domestically produced gasoline. The case is ünportant in a number of respects. First, it note cl that the WTO agreernents must not be intcrpretcd in "clinical isolation" from public international bw.21 The Apellate Body cited Article 3.2 of the DSU, which requires panels and the Appellate Body to use "customary rules of interpretation" to interpret the provisions of the WTO :1greements. Article 3.2 provides that the dispute settlement system of the WTO "serves to clarify the existing provisions of those lWTOl agreements in accordancc with customary rules of interpretation of public international law."

What are those customary rules of interpretation of public international bnv? In Gasoline, the Appcllate Body stated that "customary ruks of interpretation" would includc Article 31 of the Vien na Convention on the Interpretation of Treaties, which

"has attaincd the status of a rule of customa1y or general internationallavv".22 More importantly, in doing so, the Appellate Body has acknowledged that the WTO is not a hermetically closed rcgime,23 impermeable to the other rules of international law. ln other words the Appellate Body has "connected" the GATT /WTO sub-system of hw to the rest of international legal ordcr anclimposcd on Panels and WTO Members the obligation to interpret the WTO Agreement as any other international treaty, thercby putting an end to what Kuyper bas tenned "GATT Panels' ignorance"24 of the basic rules oftrcaty interpretation. The implications of prohibition against "clinical isolation fi·om public international law" are more full y discussed in section II of this article.

Second, the Appellatc Body offered an interpretation of Article XX that \Vas more textually accurate than the approach adopted by earlier GATT panels and which focuses on the need to consider that market access rights and the rights of a cmmt1y to protcct the environment must be rcconcilcd in the context of the WTO call, in its Preamblc, for sustainable development. In this sense, Article XX provides the inter[tce

2' CiL,olinc, at p. 17. Sec also McRae. D. (1906): "Jhc Contribntion t~f!ntcmational Tiw1c Lmt' /o !llf Dn,cloputclll of lii!CI"I!illional Lmn Recueil des Cours. T--260.

22 Cœ;o/ine, ,lt p. 17.

n A concept distinct fi:om a so-called "sclf-umtained" regime or "closcd" sub->y>tem \vhich rdèrs to :1 sub- :.ystcm ofintemational bw dut contaim ali the nece:.sary secondary norms and thar cxplicitly prohibits application of secondary norms. "That io; to ;ay that the systeJn\ countcrmcao;urc<; are 110t the normal cotmtermeasurc> of intcrnational tnv .... but are entircly separ,Jtc from rh ose 110nnal countermea,ures and arc regulatcd so a<; to limil the frccdom ofState~ to have rccoursc to them." On the discus:.ion ofwhy the CATT/\1:/TO could be arg-ued to be a ~elf-rontained regime, sec Kuyper. P.J. (1LJLJ4): The Lml' of CATT as a Spcrùil Field (_>( ht!Ci"llii/ÎOI!Ill LmJ!.

N.Y.l.h., p. 227.

- Kuypcr. ;1o; note 23, above.



bctvveen the multilateral trading system and other systems of law and policy. In Gasoline, the carlier GA TT jurisprudence was followed by the Panel, which concluded that the US regulation violatcd Article III :4 and th at these violations did not satisfy the rcquirements of Article XX. On appeal, the Appellatc Body upheld the Panel's decision that the US measure ultimately failed to qualify for the protective application of Article XX, but used a different legal rcasoning. Whereas the Panel found that the US measurc was not justified under Article XX(b), (d) or (g), the Appellate Body allowed the measure under Article XX(g) and went on to examine the consistency of the measure with the Article XX chapeau. In the first thorough examination of the Alticle XX chapeau in its 50-year histmy, the Appclhte Body detennined that the US measure did not satisfy the chapeau rcquircments, in that it was applied in a discriminatory and abusive manncr and constituted a disguised restriction on tradc.

A number of aspects of the Appcllate Body's interpretation of Article XX should be rccalled. First, the Appcllatc Body noted the need to "balance" the market-access commitments embodicd in the substantive GATT provisions, against the r:ight of countries to invokc the Article XX exception. According to the Appellate Body:

"The relationship between the afiinnative commitments set out in, c.g., Articles 1, III and XI, and the policies and interests embodied in the "General Exceptions" listed in Article XX, can be given meaning within the framework of the General Agreement and its abject and pm-pose by a trcaty interpreter only on a casc-to-case basis, by careful scrutin y of the factual and legal context in a given dispute, without disregarding the words actually used by the WTO Members themselves to express theîr intent and purpose." (Emphasis as original.)1s

This balancing approach was also reflected in the Appellate Dody's reading of the Article XX chapeau. Here, the Appellate Body seems to introducc a test of reasonableness into the analysis:

"The chapeau by its express ten11s addresses, not so much the questioned measure or its specifie contents as such, but rather the manner in which that n1.easure is applied. It is, accordingly, important to underscore that the purpose and object of the introduct01y clauses of Article XX is generally the prevention of'abuse of the exceptions' of[what was later to becom.e] Article [XX].

This insight drawn from the drafting hist01y of Article XX is a valuable one. The chapeau is animated by the principle that while the exceptions of Article XX may be invoked as a matter of legal rigbt, they should not be so a pp lied as to frustrate or defeat the legal obligations of the holder of the right under the substantive rules of the General A,Rreement. If th ose exceptions are not to be abuscd or misused, in other words, the measures falling within the particular exceptions must be applicd reasonably, wîth due regard both to the legal duties of the party claîming the exception and the legal rights of the other parties concemed." (Emphasis as origina\.)26

Second, the Appellate Body clarificd what is to be considered undcr Article XX.

Previous decisions (including the Tuna panels and the panel decision in Gasoline) had consîdered whethcr the violation of one of the GATT provisions (e.g. Articles I, III or Xl) could benefit from the provisions of Article XX. The Appellate Uody, by contrast, established that it is not merely the compatibility of that aspect of the rneasure that

2'i Gasoli11c, at p. 18.

26 Gasolinc, at p. 22.



violatcs one of the substantive GATT requirements which must be cxamined under Article XX, but rather the compatibility of the cntire measure.27 This is significant, as, generally, it is more di:fficult to prove that the "discriminatory" aspect or the "lcss favourable trcatment" provided by the measures, rather than the broader measure itself, can be justified on environmental grounds. The Appellate Body noted:

"The initial issue we arc asked to look at relates to the proper meaning of the tenu 'measures' as used both in the chapeau of Article XX and in Article XX(g). The question is whether 'measures' refers to the entirc Gasoline Rule or, alternatively, only to the particular provisions of the Gasoline Rule which deal with the establishment of baselines for domestîc refiners, blcnders and importcrs The Panel here was following the practice of earlier Panels in applying Article XX to provisions found to be inconsistent with Article III:4: the 'measures' to be analysed under Article XX are the same provisions infi·inging Article III:4.28

One problem wi th the rcasoning in that paragraph is th at the Panel asked itself whcthcr the 'Jess favoLtrable treatment' of importcd gasoline was 'primarily aimed at' the conservation of natural resources, rather than wh ether the 'measure', i.e. the baseline establishment rules, werc 'primarily airncd at' conservation of dean air. In our view, the Panel here was in error in rcferring toits legal conclusion on Article III:4 înstead of the measure în issue. The result of this analysis is to turn Article XX on its head .... The chapeau of Article XX makes it clear tint it is the 'measures' '\Vhîch arc to be examîned under Article XX(g), and not the legal finding of'less fàvourable treatment'. "29

Third, the Appellate Body established a two-tiered test for applying the Article XX exceptions:

"In order that the justif)ring protection of Article XX may be extended to it, the measure at issue must not only come under one or anothcr of the particular exccptions-paragraphs (a) to U)-listed under Article XX; it must also satisfy the requirements imposed by the opening clauses of Article XX. The analysis onder Article XX is, in other wonls two-tiered: first, provisional justification by reason of characterization of the measure under XX(g); second, furthcr appraisal of the same measure under the introductory clauses of Article XX."30

Fourth, the A pp ella te Body clarificd the meaning of both Article XX(g) and the chapeau of Article XX. In relation to Article XX(g), the Appcllate Body stated that a measure wotùd qualify as "relating to the conservation of natural resources", if the measure exhibited a "substantial relationship" with, and was not n1.crely "incidentally or înadvertently airned at", the conservation of natural rcsources. Un der Article XX(g) a measure against nmst also be made effective "in conjunction with restrictions on domestic production or consun1ption". In relation to the latter requirement, the Appellate Body stated that:

27 Gasoline, at p. 19;

"The chapeau of Article XX makes it de ar that it is the 'measures' vvhich arc to be examined under Article XX(g), and not the legal finding of'less favomablc treatment' . . . The basclinc establishment rules, takcn as a \ovhole (that is, the provisions relating ro establishment of b~sclincs for domestic refiners, along with the provi>ions rclating to ba5elines for blenders and importcrs of gasoline), need to he rclated to the 'non- deg-radation' rcquirernents set out clsewhere in the Gasolinc Rule."

2~ Gasolîne, at pp. 13-14.

2'! Gaso/ine, at p. 16 .

.\ri Gaso/ine, at p. 22.



"idcntity of treatment-constitntiug real, not merely fonnal, cquality of treatment was not needcd. On the othcr hcmd, if 110 restrictions on domestically produced like products are imposed at ali, and ali hmitations are placed upon importcd products a/one, the measure cannat be acceptcd as primarily or even substantially dcsigncd for implementing conscrvationist goals."

(Emphasis as original.}"

The Appellate Body determincd that the US measure satisfied thcse requîremcnts, markîng the first time that Article XX(g) had been uscd to justify an environ mental mcasure. By adopting a Jess narrow interpretation of Article XX(g), it increascd the likelihood that future measures would need to be consîdered un der the chapeau.

Finally, when considering the US measure under the chapeau, the Appellate Body, noting the factual findings of the panel, argued that there were reasonably available alternatives that could have been used by the United States that would have avoided discrimination agaînst imported gasoline:32

"There was more dun one alternative course of action avaibblc to the United States in promulgating regulations implcmcnting the CAA. These included the imposition of statutory baselines without differentiatioo as bet\veen domestic and importcd gasoline. This approach, if properly implcmented, conld have avoided any discrimination at all. Among the other options open to the United States was to make avaibble individual baselines to foreign refiners as weil as domcstic refiners . . "-13

The Appcllate Body concluded that the omission by the United States to explore co-operation with Brazil and Venezuela to mitigate administrative problems, and- to count the costs in1poscd on foreign refineries as it did with US refineries, provided sufficîent evidence that the US measure constituted "unjustifiable discrimination" and a "disguised restriction <:m international trade" .3.J-These concepts vvere further discussed in the following Shrimp case.

2. The Shrimp Case

After Gasoline, the next WTO case to considcr Article XX was the Shrintp dispute. This dispute arose hom a challenge by India, Malaysia, Pakistan and Thailand to a US import ban on shrim_p products from countries without certain national policies to protect cndangercd sca tUJ·tles from drowning in shrünp trawling nets. The US regulation effectîvely required exporting countrics to adopt a national policy

-'1 Gasolinc, at p. 21.

_;2 ln f;Kt, the discmsion on the meaning of the tenm u-;cd in the chapeau of Article XX was not very extemive and the Appcllate I3ody us cd the ùcts mentioned by the Panel in support of its conclusion that the US mcasure \\'a<; not "primarily" aimed at (Art. XX(g)) the protection of dean air to concludc that the two different .;;t,mdards maintained by the US regulation viohted-the provisions of the chapeau of Article XX. In Gaso/ine, at page 27, the Appclbte Body ~tated: "Wh ile the anticipatcd diŒcultie-; concerning verification and subsequent enforccment ;m; doubtless real to somc degree, the Emel viewed thelll ;1~ insufiicient to jmtify the deniai to foreign rdincrs of individual basclines permitted to domcstic refinen .... We agree with the finding abovc made în the Panel Report."

_l_l G(lso/inc, at p. 25.

14 G1soline, at pp. 2H-2LJ.



ensuring the use of a certain process and production method including turtle exclu der deviees (TEDs) to protcct sca turtlcs.

On this occasion, the Appellate Body considered that the US measure was based on a policy covered by Article XX(g), but then determined that the law was inconsistent with the language of the Article XX chapeau on the basîs that it was applied in a manncr tlnt led to arbitrary and unjustifiable trade discrimination. The legal reasoning of the Appcllate Body to support this conclusion marks the most complete discussion of Article XX yet, and therefore deserves careful consideration. Morcover, it made extensive reference to other sources of international law whcn întcrpreting the GATT, thcreby rcinforcing its conclusion in Gasoline that the WTO Agreement must not be interpreted in clinical isolation fi·om public international law.

The Appellate Uody comrnenced its decision with a cri ti cal appraisal of the earlier Shrimp Panel decision. The Panel had formulated a broad test for examining mcasnres under the chapeau~one which would excludc any mcasurc that sought to change the policics of cxporting conntrics (including, in this case, those relating to PPMs used to catch shrîmp). The Appellate Body reversed this finding, recalling its two-ticr test established in Gasolinc:

"The ~cqucncc of stcps indicatcd abovc in the analysis of a claim of justification under Article XX rcflects, not inadvcrtcncc or random choice, but rather the fundamental structure and logic of Article XX. "35

Thcn the Appcllate Body stated that such types of measures, where a country conditions access to its market upon the respect of certain policies, arc not a priori incapable of justification under Article XX. It stated:

"lt appcars to us, however, that condilionill,\; arœss to a Member's domestic market on \vhcthcr exporting Members comply \Vith, or adopt, a policy or policics unilatcmlly prescribed by the importing Member may, to some degree, be a common aspect of measures falling \vithin the scope of one or ;mother of the exceptiom (a) to (j) of Article XX. Paragraphs (a) to (j) comprise measures that are recognizcd as exceptions to substantiw obl(~;a1ions established in t11e GATT 1994, because the dmnestic policies embodied in su ch mcasures have been recognized as important and lcgitimate in character. It is not necess;lry to assume that requiring fi·mn exporting countries compliance with, or adoption of, certain policie'i (although covered in principlc by one or another of the exceptions) prescribed by the importing country, renders a measure a priori incapable of justification un der Article XX. Su ch an intcrprct~ltion rcndcrs most, if not all, of the specifie exceptions of Article XX inutile, a result abhorrent to the principles of interpretation we are boum{ to apply." (Ernphasis addcd/1'

Thcn the Appcllate Body proceeded to the examination of the rneasure at issue pm·suant to its Gasofi11e two-tîcr test. Therefore, it examined Article XX(g) to determine whether sea turtles were an "exhaustible natural resource", vvhcthcr the US measure "related to" the conservation of this resourcc, and whcthcr these measures


Sltrimp, .lt para. }}\) .

. l~> Sltl'imp, at para. 121.



were also made effective in conjunction vvith "restrictions on dornestic production or

C011SU11lption ".

The Appellatc Body accepted tlut endangered sea turtles arc "an exhaustible nattJral rcsource". In arriving at this conclusion, the Appellate l3ody statcd that the concept of natural exhaustible resourccs, draftcd 50 years ago, must be intcrprctcd in an "evolutiona1y" manner:

"The words of Article XX(g), 'exhaustîble natural resources', \Vere actually crafted more thau 50 years ago. They must be read by a treaty interpreter in the lîgbt of contemporary concerns of the comnmnity of nations about the protection and conservation of the environment . . From the perspective cmbodied in the Preamble of the IVTO Agreement, wc note that the generîc term 'natural resources' in Article XX(g) is not 'static' in its content or reference but is rather 'by definition, evolutiona1y'." (Emphasis as original.)37

The International Court of Justice has indeed made use ofsnch an "evolutionary"

approach in somc cases,3tl incluùîng in the recent 25 Septem.bcr 1997 Case Concerning the Gal>dkouo-Na,t?ymaros Project (Hungary!Slovakia). Tt is unclear, howcvcr, why the Appellate Body in Shrimp felt the need to adopt this approach, as endangered sea tm·tles would arguably fall within the ordinary meaning of "exhaustible natural resources" ÎJ;l

1993-1.994, date of the conclusion of the WTO Agreement. Moreovcr, a numbcr of previous panels bad recognized that a variety of rcncwable resources-salmon, herring, dolphîn, and dean air-ail constituted exhaustible natural resourccs for the pm-pose of Article XX(g). 39

To determine the meaning of "natural resources", the Appcllate Dody stated that it is "pertinent to note that modern international conventions and declarations make fi·equent references to natural resources as en1bracing both living and non-living resources."40 It then went on to examine the use of the tcrm "natural resources" in a number of international conventions, including the 1982 United Nations Convention on the Law of the Sea41 (UNCLOS), the Convention on Diological Diversity,42 the Resolution on Assistance to Developing Countries adopted .in conjunction with the Convention on the Conservation ofMîgratory Species ofWild Animals,43 and the Convention on International Trade in Endangcrcd Specîes ofWild Fauna and Flora44 (CITES). As examined further in section III of this article, the use of these treaties to

37 Shrimp, at para. 129.

JS See i'.iami/Jia (Legal Conseq11enœs) AdPisorJ' Opi11ion (1971) l.Cj. Rep., at 31. Sec also Argean Sea Continental She!f Case (1978) I.CJ Rep., 3. The Appellate 13ody also quoted Jennings, Robert and Arthur Watts (ed>) (1992): Oppmhrim's Intemational Lml' (9th edition, vol. I) (London: Longmans, p. 1282 and Jimenez de Arechaga, E. (1978-l): Imernationa/ Law in the Pas/ Thini of a Crl!lllry, 159 Recueil des Cours 1, p. 49.

JY 'limaI, at para. 4.9; Salmon-Herrii!J<, at para. 4.4; ·and Gaso/ine (Panel Report), at para. 6.36.

41J Shri1!1p, at para. 129. -

41 (Original footnote.) Done at lvlontego Bay, 10 Deccmber 1982, UN Doc. A/CONF.62/122; 21 International Legal Materials 1261 (hereinafter UNCLOS).

42 (Original footnote.) Dune at Rio de Janeiro, 5 June 1992, UNEP/Bio.Div./N7-INC5/4; 31 International Legallvlatcrials RlR. Biological Divcrsity, and that Thailand and the United States have signed but not ratified the Convention.

13 Convention on the Couservatiml oflvligratory Spec:ic> ofWild Animais, 29 August 1979, 19 J.L.M. 15.

44 Convention on International Trade in Endangered Species of Wild Flora and Fauna, 3 March 1973, 27 U.S.T. 1087, T.I.A.S. No. 8247 (hereinafter CITES).



interpret WTO provisions raises a nmnber of important questions about how non- WTO conventions and other rulcs of international law are used by panels and the Appellate llody to interpret WTO legal texts.

After dctcrmining that sea turtles were "exhaustible natural resources", the Appellate Body examined whether the US measure was su:fficiently related to the policy goal of conserving these resom-ces. Following an examination of the "general design and structure of the measure", the Appellate Body concludcd that the measure

"relatcd to" the goal of conserving exhaustible natural resources as requîred by Article XX(g). The US n1easurc cxhibited a "tneans/ends relationship" with the legitimate policy of conserving an exhaustible and endangcrcd species that was observably a close and real one.45

Finally, the Appellate Body noted that the measures were made effective in conjunction with domestic regulations requiring the use of TEDs. Consequently, the US n1casurc satisfied the requirements of Article XX(g). 46

Having decidcd that the m_easure satisfied the requirements of Article XX(g), the Appellate Body th en proceeded to examine the compatibility of the US measure with the provisions of the chapeau. I t reiterated that the purpose of the chapeau of Article XX is "generally the prevention of the abuse of the exceptions of Article XX" .47 The Appellate Body stated that there are three standards contained in the chapeau. First, the measure must not constitute arbitrary discrimination between countries where the same conditions prevail. Second, the measure must not constitute urljustifiable discrimination between countries wherc the same conditions prcvail. Third, the measure must not constitute a disguised restriction on international tradc.48 ln relation to the first two components, which can be read together, the Appelhte Body notcd that tl1tcc clements must exist. One îs that the application of the measure tnust result in discrimination, either between different exporting Members, or between exporting Mcmbers and the importing Member. Another is that the discrimination must be arbitrary or unjust[fiable in character. Finally, this discrimination must occur between countries where the sa me condWo11s prwail.

In f:tct, the A pp ella te Body interprcted the vvording of Article XX in a

"purposive" manner, noting that when draftîng the WTO Prean1blc, the ncgotiators rcpeated the wording of the preamble of the GATT 1947, but added a reference to sustainable dcvclopment. The Appellate Body stated:

45 See Shrimp, at para. 135: "Article XX(g) rcquirc-; that the measure sought to b~ jmtified be one vvhich 'relat[csJ to' the conservation of exhamtible ll;ltur,ll resources. ln making thi> determination, the trcaty interpreter esscntially looks into the relatiomhip bctwccn thc mcamrc at stakc and the lcgitimatc policy of conserving exhmstible natural resources." Id. at para. 140: "This rcquircmcnt is in our vic\\' dircctly connected \Vith th~

po licy of conservation of sca turtlcs." Id., at para. 141: "ln [its] general design and ;tructure, the mea>ure is not disproportion~uely wide in its scope and reach in relation to the policy objcctivc of protection and conservation of sea turtles. The rneans are, in principle, reasonably rclated to the cmls."

~6 Shril!lp, at para. 143.

17 Shri111p. at para. 150.

-IR Shrilllp, at para. 150.



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