James Flett of the European Commission has an interesting article in the latest JIEL issue, entitled "WTO Space for National Regulation: Requiem for a Diagonal Vector Test." His focus is on de facto violations of the national treatment obligation.
When I first saw the article, I thought about doing a long blog post discussing the whole piece. But after reading through it, I realized there is too much in there to deal with it all. Instead, I'm just going to focus on the following passage from the introduction:
The central proposition of this article is that the problem [of balancing a ‘federal’ trade interest with local regulatory autonomy] cannot be solved by mechanistically comparing the different regulatory treatment of one (imported) good and a different (domestic) good, that is, through a diagonal vector of comparison. Rather, the problem can only be solved by enquiring into what the true objective of the measure is (regulatory or protectionism), whether it is legitimate, whether the measure contributes to the objective, and whether there is another equally effective but less trade restrictive measure available. ... In short, the question is whether the measure is necessary or reasonable.
Let me take each of these three sentences individually.
First, he says that trade rules should not compare "the different regulatory treatment of one (imported) good and a different (domestic) good, that is, through a diagonal vector of comparison." Many readers probably know what this means, so I won't go into detail here, but see this article for more. On this point, I'll just say that I agree whole-heartedly. In my view, comparing one imported good to one (like/directly competitive or substitutable) domestic good tells you very little about the measure, its impact on trade, or its consistency with trade rules.
Second, he says that determining the "true objective" of the measure is the right approach to finding de facto violations, and he distinguishes between "regulatory" and "protectionist" measures. I mostly agree with this, although I'm not sure "regulatory" is the opposite of "protectionist." But then he goes on to ask whether "there is another equally effective but less trade restrictive measure available." On this part, I wonder if this is really a helpful inquiry for non-discrimination. As most people will recognize, this is part of the necessity test already, and adding it to non-discrimination would blur those lines (based on his next point, though, that may be what he is trying to do). But beyond that, I'm just not sure it is a good proxy for identifying protectionism. Perhaps it is one minor factor that could be considered, but I'm not sure it tells you all that much about the true objective of a measure.
Finally, he concludes by saying that the question is whether the measure "is necessary or reasonable." So here we have the important issue of how a "non-discrimination" standard relates to other standards, such as "necessary" or "reasonable." (Or in the case of investment treaties, mentioned in the last post, "fair and equitable" treatment.) Depending on the particular interpretation, there could be more or less overlap between the different obligations. But clearly, in my view, these standards are not the same thing. Non-discrimination is more specific and bounded, I would say. "Necessary," "reasonable," and "fair and equitable" are all much more broad and vague. I don't think it's a big secret that I like the non-discrimination principle, and am wary of these others in the IEL context. But I'm happy to hear more from people who think these standards can serve the same functions as non-discrimination, or who think the broader standards are preferable.
