The panel report in United States - Tariff Measures on Certain Goods from China (DS543) was circulated today. There are some big picture issues related to the dispute (e.g., will the U.S. appeal it into the void?), but I want to focus on an obscure interpretive point related to the necessity test under certain Article XX sub-provisions. The panel offered the following reasoning in this regard:
7.112. In the following sections, we will therefore assess (i) whether the United States has raised a public morals objective within the meaning of Article XX(a) of the GATT 1994; (ii) whether the measures are designed to protect the public morals objective as invoked by the United States; and (iii) whether the measures are necessary to protect this objective. Each step of this analysis will allow us to continue our assessment towards an overall conclusion whether the challenged measures are "necessary to protect public morals" within the meaning of Article XX(a) of the GATT 1994.
...
7.151. In the present case, the Panel does not consider that the "design test", if there is one, is an undemanding task to perform. Having said this, the Panel is not convinced that, in the absolute, the imposition of additional duties would always be incapable of protecting public morals or would never be incapable of protecting public morals. In the circumstances of this case, the Panel finds it difficult to assess at any general level whether the measures at issue are "designed" to protect public morals and is therefore not convinced that the intermediate step of such a design test is helpful for its analysis. The more detailed design aspects and consequential understanding of measures may only become apparent once an analysis of the necessity of the measures is advanced further. In this regard the Panel agrees with the Appellate Body that it must not structure its analysis of the "design" step in such a way as to lead it to truncate its investigation prematurely and thereby foreclose consideration of crucial aspects of the "necessity" analysis.
7.152. The Panel recalls its preference for a holistic approach to determining whether the measures at issue are "necessary to protect public morals" within the meaning of Article XX(a). In the process of this holistic analysis, the Panel considers that whether an appropriate nexus exists between the products subject to the additional duties and the public morals objective as invoked by the United States pertains rather to the assessment of the line or balance between the trade-restrictive measures that are acceptable as necessary to protect public morals, and those that are not. For this reason, the Panel will address the parties' (and third parties') arguments related to the nexus between the products subject to additional duties and the public morals objective as invoked by the United States, in the context of the necessity analysis.
(emphasis added)
It always seemed strange to me to have a less demanding "design" element followed later by a more demanding "necessary" element. Could a measure ever be "necessary" for a public policy purpose but not "designed" for that purpose? That's hard to imagine. Either the measure is "necessary" for a particular policy purpose, in which case it is justified under the sub-provision; or it is not "necessary," in which case it is not justified. An intermediate finding that the measure is "designed" for the purpose in question doesn't add much, in my view. If the panel was thinking along these lines, which I think it might have been, this reasoning is taking us in the right direction.
