One week ago, global ice cream maker Ben & Jerry's announced that the firm would no longer allow products to be sold under its brand in the Occupied Palestinian Territories (OTP). Israel's continuing occupation of these territories is almost universally considered a violation of international law-except that is, by the political right and its fellow travelers both in the United States and in Israel itself. The hysterical response to the announcement was not, however, in Israel limited to the political right. The country's president, Isaac Herzog, accused the company of "economic terrorism"-a characterization that did not sit well with victims of actual terror attacks and their families. Ben & Jerry's intends to remain in Israel (as defined by its internationally recognized borders) but will seek a local franchising or distribution arrangement that accepts its avowedly values-based rejection of selling in the OTP. Ben & Jerry's parent company is Unilever, which since 2020 has a single legal structure in the United Kingdom, though the food and beverage division continues to be headquartered in the Netherlands. Unilever itself has not embraced Ben & Jerry's policy, but an acquisition agreement allows the board of Ben & Jerry's itself independence from the parent on such matters.
In the United States, several state-level authorities have threatened to move to punish Ben & Jerry's for its refusal to continue to sell in the OTP, using anti-BDS (Boycott, Divestment, and Sanctions) laws, which penalize economic actors for supporting various activities aimed at putting market pressure on Israel with regard to its treatment of Palestinians. Mostly, these laws punish such actors by denying them access to government procurement contracts-public entities such as pension funds may also be required to divest from the target company, meaning in this case selling Unilever shares). Let's set aside the complex legal issues of whether Ben & Jerry's move qualifies as a "boycott" or "divestment": it did not act under pressure from the BDS movement but consonant with its own corporate values, and is not pressuring other economic actors to avoid doing business with Israel, and so in this case these laws may not apply at all (and if they did there would be serious constitutional issues about freedom of expression). What if some states did manage to penalize Ben & Jerry's decision?
An obvious question then comes to mind: does WTO law have anything to say about a Member (generally, the US is responsible for state-level measures) punishing a business for its failure to export to, or for its refusal to allow its intellectual property to be used in a particular foreign territory? The Subsidies and Countervailing Measures (SCM) Agreement prohibits conditioning the grant of subsidies on exports, but what about other incentives or disincentives? Article XI of the GATT bans both import and export restrictions. It is arguable that penalizing a domestic producer for not directing some of its product to a particular foreign market is restrictive in nature-it prevents the producer from allocating sales based on its own business priorities. The WTO case law suggests a very broad notion of the term "restriction" in Article XI: as the Appellate Body put it in the China-Raw Materials case, echoing a long line of jurisprudence, a restriction is "a thing that restricts something or someone, a limitation on action." In any case, Article I of the GATT, Most-Favoured Nation (MFN) applies very broadly, to all "...rules in connection with...exportation." In essence, a WTO Member may not make a rule connected to exportation that provides a legal guarantee of exports to a territory connected to one country but not to all WTO Members, in this case all Members who might want guaranteed access to Ben & Jerry's.
Even where Ben & Jerry's does not manufacture the ice cream in the US, requiring it have products sold under its trademark in a foreign territory may raise issues under the TRIPs Agreement. Article 20 of the TRIPs Agreement (which has its own MFN provision) stipulates: The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements" (Emphasis added). Requiring that Ben & Jerry's allow its trademark to be used in a particular foreign location certainly seems like a "special requirement", with the geographical aspect of the restriction a violation of MFN under TRIPs. Forcing the question of the justifiability of these kinds of state measures under TRIPs would have the advantage of some real scrutiny of anti-BDS laws under international norms
Since the penalty connected to the anti-BDS laws is often exclusion from state procurement, we also have to turn to the plurilateral WTO Government Procurement Agreement (GPA). While the US is a party, there is only limited coverage for state-level procurement. Where state-level procurement is covered, then the non-discrimination provisions (Article III) of the GPA would apply. These provide that a locally-established supplier cannot be treated differently from others based on "degree of foreign affiliation..." Ben & Jerry's decision not to affiliate with ice cream distributors and seller in the OTP is thus not a permissible basis to exclude it, and possibly Unilever as well as the parent, from procurement contracts. But, again that would only apply to the extent that the state-level procurement in question is covered under the US commitments in the GPA.
Who would bring a dispute complaint against the US? In WTO law, a complainant does not have to demonstrate a specific trading interest in the dispute in order to have standing (the doctrine of presumptive nullification and impairment). So is there a country that wants to stand up for those met with legal bullying and harassment when they take a a heart-felt stand against Israel's illegal occupation?