This is from the U.S. third party submission in EC - Seal Products:
7. ... Article 2.1 of the TBT Agreement requires a two-step analysis: (1) whether the challenged technical regulation creates a detrimental impact on imports of like products; and (2) whether the detrimental impact stems exclusively from a legitimate regulatory distinction rather than reflecting discrimination against the group of imported products.
8. Despite the identical wording of the provisions, the Panel found that the legal standard under Article 2.1 of the TBT Agreement did not “equally appl[y]” to GATT 1994 Article III:4. Instead, the Panel found that while “treatment no less favourable” in Article 2.1 requires the two-step inquiry the Appellate Body set forth in US – Clove Cigarettes and US – Tuna II (Mexico), the same phrase in Article III:4 of the GATT 1994 requires only a finding of detrimental impact on imports of like products to support a finding of inconsistency. Thus, under the Panel’s interpretation, the same phrase, used in two related national treatment provisions, sets forth significantly different legal standards.
According to the U.S., the Panel's interpretation is in error, and the "the two provisions should be interpreted in the same way."
We are all eagerly awaiting guidance from the AB on how GATT Article III:4 and TBT Article 2.1 relate, and what the proper scope of GATT Article III:4 is. Two options are: (1) GATT Article III:4 looks only at detrimental impact; or (2) GATT Article III:4 is identical to TBT Article 2.1.
But let me suggest a third option: GATT Article III:4 goes beyond simple detrimental impact, but does not go quite as far as the TBT Article 2.1 second element, "stems exclusively from a legitimate regulatory distinction rather than reflecting discrimination." Instead, there could be a second element to Article III:4 that would be a little easier for a complainant to prove, perhaps along the lines of "design, structure, and architecture."
The point of this approach is to avoid an exclusive detrimental impact test for Article III:4, under which we would suddenly find ourselves with thousands more violations than we knew existed, while still maintaining some distinction between Article III:4 and Article 2.1.
