From the EU response to the Seal Products panel's first set of questions:
Question 43 (All parties) What aspects of the EU Seal Regime should be examined for the necessity test under Article XX(a) and XX(b) of the GATT 1994? Explain your position in light of the Appellate Body's statement in paragraph 177 of its report in Thailand – Cigarettes, "[w]hen Article XX(d) is invoked to justify an inconsistency with Article III:4, what must be shown to be "necessary" is the treatment giving rise to the finding of less favourable treatment."
144. In Thailand - Cigarettes, the Appellate Body noted that:
Furthermore, when Article XX(d) is invoked to justify an inconsistency with Article III:4, what must be shown to be "necessary" is the treatment giving rise to the finding of less favourable treatment. Thus, when less favourable treatment is found based on differences in the regulation of imports and of like domestic products, the analysis of an Article XX(d) defence should focus on whether those regulatory differences are "necessary" to secure compliance with "laws or regulations" that are not GATT-inconsistent.78
145. The above quoted passage indicates that, according to the Appellate Body, when less favourable treatment results from differences between the regulation of imports and of domestic products, or by analogy from differences between the regulation of different categories of imports, the analysis under Article XX(a) or Article XX (b) should focus on whether such "regulatory differences" are "necessary" in order to achieve the objectives set out in either of those two provisions at the level of protection chosen by the responding Member.
146. In the present case, the less favourable treatment alleged by the Complainants results from the interplay between the General Ban and the IC and MRM exceptions. Specifically, the alleged les favourable treatment results from the fact that the placing on the market of some products imported from Greenland and of some domestic products is allowed, respectively, by the IC exception and the MRM exception, whereas the placing on the market of some products imported from Canada and Norway is prohibited pursuant to the General Ban.
147. Therefore, if the Panel found that the alleged difference in treatment is inconsistent with Articles I:1 and/or Article III:4 of the GATT 1994, it should examine whether the "regulatory differences" between the General Ban and the two exceptions are "necessary" in order to achieve the objectives invoked by the European Union.
148. More specifically, in order to establish that the less favourable treatment alleged by the Complainants is justified under Article XX(a) or Article XX(d), the following would have to be shown: (1) that the treatment provided to seal products subject to the General Ban is “necessary” in order to achieve the objectives set out in Article XX(a) and/or Article XX(b) at the selected level of protection; and (2) that it is not “necessary”, in order to achieve those objectives at the same level of protection, to extend the same treatment provided under the General Ban to seal products falling under the MRM exception or the IC exception.
149. The Complainants appear to consider that the European Union is required to show that the more favourable treatment provided under the IC exception and the MRM exception is, in and by itself, "necessary" in order to achieve the policy objectives pursued by the EU Seal Regime.79 As just explained, however, according to the Appellate Body, what must be shown is that the "regulatory differences" between the General Ban and the two exceptions are "necessary".
Note that the Appellate Body refers to the situation "when less favourable treatment is found based on differences in the regulation of imports and of like domestic products, ... ." Is that the same regulatory difference the EU is referring to when it talks about "the 'regulatory differences' between the General Ban and the two exceptions"?
