This is a guest post from Geneva-based trade lawyer Adarsh Ramanujan
“Risks non-fulfilment would create”
I wanted to follow-up from Simon’s post last week on the Article 2.2, TBT jurisprudence arising from the Article 21.5 AB Report in US – COOL. I believe there are some important clarifications from the AB on what is meant by taking into account “risks non-fulfilment would create”. In my opinion, below are the significant points of clarification:
1. Non-fulfilment of what?
The AB makes a clear distinction between the “legitimate objective” behind the technical regulation and “other potential legitimate objectives” – it is only the former that is relevant and not the latter.
“In addressing the question at hand, we turn first to the text of Article 2.2 of the TBT Agreement, namely, the phrase "taking account of the risks non-fulfilment would create". In our interpretation of Article 2.2 above, we have noted that, textually, the "risks" to be "tak[en] account of" under Article 2.2 are those that would be created by the "non-fulfilment" of the "legitimate objective" of the technical regulation at issue. In this regard, the risks that would be created by the non-fulfilment of legitimate objectives other than the particular legitimate objective at issue are not referred to in the text of Article 2.2. In other words, because the objective of the amended COOL measure is the "provision of consumer information on origin", the risks referred to in Article 2.2 are those that would be created by the non-fulfilment of the "provision of consumer information on origin", rather than the risks related to other potential legitimate objectives, such as the protection of public health or the environment. In that regard, we do not view the phrase "taking account of the risks non-fulfilment would create" as providing a direct textual basis for taking into account the relative importance of the objective pursued, i.e. the importance of the objective pursued as compared to the importance of other objectives.”
(Para 5.277)
As we know, the characterisation of the “legitimate objective” by a Member in a dispute is not definitive. For instance, in the US – COOL case (Article 21.5), the US argued the “legitimate objective” to be providing specific information to consumers of information on where livestock were born, raised and slaughtered. The Panel rejected this argument and found the “legitimate objective” as providing consumer information on origin.
2. Importance of the “legitimate objective”?
The AB here makes a distinction between the “relative importance” between various objectives versus the “importance to the Member implementing the regulation” – the former is irrelevant, but the latter is relevant. One may have noticed the earlier quote from para 5.277 mentions this and here is the next relevant passage in this respect:
“However, we consider it useful to distinguish between the relative importance of an objective, on the one hand, and the importance of the objective to the Member implementing the technical regulation at issue, on the other hand. As we see it, the importance of the objective to the Member implementing the technical regulation at issue could inform the analysis under Article 2.2 in some capacity, to the extent it is reflected in the level considered appropriate by the Member to pursue the relevant objective, or the actual degree of contribution made by the technical regulation to its objective. For instance, where a Member chooses a high level of fulfilment for a technical regulation to contribute to its objective, this may be indicative of the importance this Member places on the fulfilment of that objective, and evidence pertaining to the importance a Member places on an objective might inform an assessment of the degree of contribution made by the technical regulation to its objective. Thus, we would ordinarily expect the gravity of the consequences arising from the non-fulfilment of the technical regulation's legitimate objective to correlate, at least to some extent, to the importance of the objective to the Member concerned. However, this does not mean that the relative importance of an objective, as determined against other potential objectives that a Member might pursue, is a factor directly pertinent to "taking account of the risks non-fulfilment would create" under Article 2.2.”
(Para 5.279)
The above approach, therefore, distinguishes itself from the approach one takes under Article XX, GATT. The threshold to be applied under Article 2.2, TBT does not change simply because the objective being pursued (e.g. human life / health) is relatively more important than other objectives (e.g. providing consumer information). Nonetheless, the AB was careful in suggesting that if a Member considers a certain “legitimate objective” to be important within its regulatory space, this must be accounted for as part of the holistic analysis. I believe this may be a significant bone of contention in cases to come.
- 3. Source of assessing “risks non-fulfilment would create”?
- I think the following passages bring out the point clearly enough:
“5.284 In this regard, we recall the interpretation of the phrase "taking account of the risks non-fulfilment would create" set out above, namely, that "taking account" calls for an active and meaningful consideration of "the risks non-fulfilment would create" in the weighing and balancing under Article 2.2. At the same time, this requirement is also sufficiently flexible so as to be adaptable to the particularities of a given case. Thus, certain aspects of a technical regulation may be salient to "taking account of the risks non-fulfilment would create" in a given case. A technical regulation itself, or its related instruments, might contain elements pertaining to the nature of the risks it seeks to address and the gravity of the consequences arising from the non-fulfilment of its objective.
5.286. …As we have stated above, a technical regulation itself, or its associated instruments, may reveal elements relevant to the nature and gravity of the risks addressed. However, the Panel did not consider the evidence and argumentation presented by Canada and Mexico to substantiate the connection between specific aspects of the design, architecture, and structure of the amended COOL measure, on the one hand, and the nature of the risks of the non-fulfilment of its objective or the gravity of the consequences arising from its non-fulfilment, on the other hand.”
4. The final point, of course, is what Simon mentioned in his earlier post – the fact that “risk of non-fulfilment” must be assessed in all cases; the Panel cannot cite any inability and choose not to assess this fully. (Paras 5.295-296)
I tend to agree with Simon that there always seem to be lingering issues when it comes to the TBT and this is especially so in the context of points (2) and (4) above. In addition, the AB has gone to great lengths to reiterate that the analysis required is “holistic”, even when it comes to the factor, “risks non-fulfilment would create”. These are fact-heavy assessments and from the way I read the AB Report, I believe Panel assessments of these issues are going to get more fluid and open-ended and at the same time, it will also get harder to successfully appeal a Panel Report on Article 2.2, TBT issues.
The above, of course, is just limited to the factor “risks non-fulfilment would create”. As I understand, there seem to be other interesting aspects in the AB Report, but they will be more appropriately dealt with in other pieces.
