The GATS today does not contain a direct requirement that domestic regulatory measures be the least trade restrictive (Article VI:5 combines this test with a nullification or impairment requirement). This may be contrasted with Article 2.2 of the TBT Agreement and Article 2.2 of the SPS Agreement. Neither the TBT Agreement provision nor the SPS Agreement provision has been the basis for significant successful litigation--even in GMOs.
However, in the GATS context, there appears to be a great deal of concern regarding the possibility of extending this type of standard to services. In a 2003 letter to the USTR, the National Conference of State Legislatures wrote as follows:
We also urge the United States to advocate for trade rules that contain legal standards consistent with the U.S. Constitution and applicable case law. For example, international agreements that include standards such as "least trade restrictive" or "least burdensome" are inconsistent with the U.S. Constitution and may affect a state or municipality's ability to implement effective economic development programs and zoning laws. Instead, we support legal standards that provide a lesser burden for state and local governments to defend their legitimate governmental interests that are consistent with existing law. The Supreme Court has often held that the burden on state or local governments to defend their laws is merely to show that the standard is "rationally related to a legitimate governmental interest." A standard, such as "least burdensome," on the other hand, is, on its face, far more stringent that a test that merely asks if the standard rationally serves a legitimate government interest. Moreover, such a standard inherently places the burden on governments to defend the legitimacy and scope of their regulations, rather than on the plaintiff to show that the regulation is arbitrary and capricious.
I find some of these concerns curious. First, given that this standard already applies in goods, it is strange to see such strong legal criticism. Second, I am not certain what the basis is for claims that a least trade restrictive standard would be "inconsistent with the Constitution." "Inconsistency" is not the same is "violation", and it may be that the authors of this letter are simply referring to the fact that "least trade restrictive" is more stringent than the domestic rule under the Commerce Clause. Even here, while it is true that necessity testing is generally used in the U.S. after a finding of discrimination, it is certainly not true that least trade restrictive alternative analysis is foreign to U.S. constitutional jurisprudence. Furthermore, a Pike v. Bruce Church type balancing test would seem even more intrusive than a least trade restrictive alternative test.
But the important point is that I can see no violation of the U.S. Constitution that would arise from the acceptance by the U.S. of least trade restrictive alternative analysis in GATS. As a matter of fact, that discipline already exists in GATS, but now can only be invoked after a finding of nullification or impairment. This makes it unlikely to be the basis for successful litigation, although some aspects of the U.S. Sarbanes Oxley law (those restricting the consulting business of auditors) appear to be somewhat vulnerable.