[This post is from my good colleague, Kyle Dickson-Smith. He is interested in some of the issues that appear to be unresolved in the Panel Report]. Now that the AB decision is out, I anticipate that he will follow up to evaluate if the AB has resolved these issues. - ASA]
With the seal hunting season mostly behind us, the AB Seals decision is expected momentarily. In fact it emerged this morning. Much interest has been raised over the Appellate Body (AB) decision in this matter.
The WTO obligations under the TBT Agreement and the GATT often require a determination of whether the measures are necessary to meet their objectives. In considering the common notion of “necessity”, it is interesting that the WTO panel (Panel) limited its discussion when comparing the meaning and operation of GATT XX(a) and Article 2.2, despite the conceptual overlap. It would have been helpful for the Panel to have better distinguished why these obligations were different. While Article 2.2 of the TBT Agreement is an obligation with a self-contained exception (“not more trade restrictive than necessary”), GATT Article XX(a) is not; it is a defence in its own right applying to other GATT obligations. As a result, GATT Article XX has broader application. So the question is whether this is a basis for differentiating the GATT XX exception from Article 2.2 of the TBT Agreement. And, if that is the case, then how?
In its analysis under Article 2.2 of the TBT Agreement, the Panel determined that the EU seal regime was “not more trade-restrictive than necessary”. Yet, while the Panel found that the EU seal regime was capable of making and did contribute to addressing public morals concerns (under Article 2.2 of the TBT Agreement), the panel rejected the EU’s defence under the GATT XX(a): the panel found that the EU seal regime was “necessary” to protect public morals, but it determined that the regime had a discriminatory impact that could not be justified by the EU (under the chapeau of GATT XX).
While the Panel did make a point that the GATT and the TBT Agreement should be interpreted in a 'consistent and harmonious manner', it did not elaborate on how that should be achieved for GATT XX and Article 2.2 of the TBT Agreement.
This perhaps will be clarified by the AB decision. With the benefit of Rob Howse's thoughtful reports throughout the AB hearing, we know that Division Member Chang was alert to the difference in the nature and application of Article 2.2 and GATT Article XX. As Rob Howse discussed, because of this difference between Article 2.2 and GATT XX, the AB may clarify and establish a more streamlined test under Article 2.2, to require the complainant to first establish (as a prima facie standard) that there was a reasonably available less trade-restrictive alternative to the impugned measure- and if that prima facie standard is not fulfilled by the complainant, the analysis ends there.
Noticeably, GATT XX(a) is subject to a general non-discrimination requirement, while Article 2.2 is not. How will the AB ‘factor in’ that distinction when refining a legal test under Article 2.2?
Given that GATT XX-like exceptions have found their way into investment agreements (such as the Australia-Korea FTA and the China-ASEAN Investment Agreement), that makes the AB’s interpretation of such clauses even more relevant for such investment treaties.
