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WTO ANALYTICAL INDEX: GATT 1994 General Agreement on Tariffs and Trade 1994 |
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> General Agreement On
Tariffs And Trade 1994 |
Article XIX: Emergency Action on Imports of Particular Products 1. (a) If, as a result of unforeseen developments and of the effect of the obligations incurred by a contracting party under this Agreement, including tariff concessions, any product is being imported into the territory of that contracting party in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products, the contracting party shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury, to suspend the obligation in whole or in part or to withdraw or modify the concession.
(b) If any product, which is the subject of a concession with respect to a preference, is being imported into the territory of a contracting party in the circumstances set forth in subparagraph (a) of this paragraph, so as to cause or threaten serious injury to domestic producers of like or directly competitive products in the territory of a contracting party which receives or received such preference, the importing contracting party shall be free, if that other contracting party so requests, to suspend the relevant obligation in whole or in part or to withdraw or modify the concession in respect of the product, to the extent and for such time as may be necessary to prevent or remedy such injury.
2. Before any contracting party shall take action pursuant to the provisions of paragraph 1 of this Article, it shall give notice in writing to the CONTRACTING PARTIES as far in advance as may be practicable and shall afford the CONTRACTING PARTIES and those contracting parties having a substantial interest as exporters of the product concerned an opportunity to consult with it in respect of the proposed action. When such notice is given in relation to a concession with respect to a preference, the notice shall name the contracting party which has requested the action. In critical circumstances, where delay would cause damage which it would be difficult to repair, action under paragraph 1 of this Article may be taken provisionally without prior consultation, on the condition that consultation shall be effected immediately after taking such action.
3. (a) If agreement among the interested contracting parties with respect to the action is not reached, the contracting party which proposes to take or continue the action shall, nevertheless, be free to do so, and if such action is taken or continued, the affected contracting parties shall then be free, not later than ninety days after such action is taken, to suspend, upon the expiration of thirty days from the day on which written notice of such suspension is received by the CONTRACTING PARTIES, the application to the trade of the contracting party taking such action, or, in the case envisaged in paragraph 1 (b) of this Article, to the trade of the contracting party requesting such action, of such substantially equivalent concessions or other obligations under this Agreement the suspension of which the CONTRACTING PARTIES do not disapprove.
(b) Notwithstanding the provisions of subparagraph (a) of this paragraph, where action is taken under paragraph 2 of this Article without prior consultation and causes or threatens serious injury in the territory of a contracting party to the domestic producers of products affected by the action, that contracting party shall, where delay would cause damage difficult to repair, be free to suspend, upon the taking of the action and throughout the period of consultation, such concessions or other obligations as may be necessary to prevent or remedy the injury.
(a) Application of Article XIX 483. In Argentina - Footwear (EC) and Korea - Dairy(658), the Appellate Body held that "any safeguard measure(659) imposed after the entry into force of the WTO Agreement must comply with the provisions of both the Agreement on Safeguards and Article XIX of the GATT 1994".(660) As regards the relationship between Article XIX and the Agreement on Safeguards, see paragraphs 508-513 below (i) "as a result of "unforeseen developments" Requirement to demonstrate "unforeseen developments" 484. In Argentina - Footwear (EC) and Korea - Dairy, one of the issues was the omission of the criterion of "unforeseen developments", contained in Article XIX:1(a) of GATT 1994, from the Agreement on Safeguards, most notably from Article 2.1. The Panel on Argentina - Footwear (EC) had found that "the express omission of the criterion of unforeseen developments in the [Agreement on Safeguards], (which otherwise transposes, reflects and refines in great detail the essential conditions for the imposition of safeguard measures provided for in Article XIX of GATT), must ... have meaning".(661) The Panel concluded that "safeguard investigations conducted and safeguard measures imposed after the entry into force of the WTO agreements which meet the requirements of the new Safeguards Agreement satisfy the requirements of Article XIX of GATT."(662) The Panel in Korea - Dairy reached the same conclusion.(663) The Appellate Body rejected this conclusion of the Panel as inconsistent with the principles of effective treaty interpretation(664) and with the ordinary meaning of Articles 1 and 11.1(a) of the Agreement on Safeguards. See paragraph 510 below. 485. In Chile - Price Band System, the Panel found that the importing Member failed to demonstrate that the safeguard measures at issue had been applied "as a result of unforeseen developments", "as required by Article XIX:1(a) of GATT 1994."(665) Concept of "unforeseen developments" 486. In Argentina - Footwear (EC), the Appellate Body pronounced itself on the meaning of the phrase "as a result of unforeseen developments" which, although not contained in the Agreement on Safeguards, is set forth in Article XIX:1(a). The Appellate Body held that "the developments which led to a product being imported in such increased quantities and under such conditions as to cause or threaten to cause serious injury to domestic producers must have been 'unexpected'": "To determine the meaning of the clause - 'as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions ... ' - in sub-paragraph (a) of Article XIX:1, we must examine these words in their ordinary meaning, in their context and in light of the object and purpose of Article XIX.(666) We look first to the ordinary meaning of these words. As to the meaning of 'unforeseen developments', we note that the dictionary definition of 'unforeseen', particularly as it relates to the word 'developments', is synonymous with 'unexpected'.(667) 'Unforeseeable', on the other hand, is defined in the dictionaries as meaning 'unpredictable' or 'incapable of being foreseen, foretold or anticipated'.(668) Thus, it seems to us that the ordinary meaning of the phrase 'as a result of unforeseen developments' requires that the developments which led to a product being imported in such increased quantities and under such conditions as to cause or threaten to cause serious injury to domestic producers must have been 'unexpected'".(669) Unforeseen developments as describing a set of circumstances 487. The Appellate Body, in Argentina - Footwear (EC), then held that the requirement of "unforeseen developments" did not establish a separate "condition" for the imposition of safeguard measures, but described a certain set of "circumstances": "When we examine this clause - 'as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions ... ' - in its immediate context in Article XIX:1(a), we see that it relates directly to the second clause in that paragraph - 'If, ... , any product is being imported into the territory of that Member in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products ...'. The latter, or second, clause in Article XIX:1(a) contains the three conditions for the application of safeguard measures. These conditions, which are reiterated in Article 2.1 of the Agreement on Safeguards(670), are that: (1) a product is being imported 'in such quantities and under such conditions'; (2) 'as to cause'; (3) serious injury or the threat of serious injury to domestic producers. The first clause in Article XIX:1(a) - 'as a result of unforeseen developments and of the obligations incurred by a Member under the Agreement, including tariff concessions ... ' - is a dependent clause which, in our view, is linked grammatically to the verb phrase 'is being imported' in the second clause of that paragraph. Although we do not view the first clause in Article XIX:1(a) as establishing independent conditions for the application of a safeguard measure, additional to the conditions set forth in the second clause of that paragraph, we do believe that the first clause describes certain circumstances which must be demonstrated as a matter of fact in order for a safeguard measure to be applied consistently with the provisions of Article XIX of the GATT 1994. In this sense, we believe that there is a logical connection between the circumstances described in the first clause - 'as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions ... ' - and the conditions set forth in the second clause of Article XIX:1(a) for the imposition of a safeguard measure."(671) Point in time where the developments were unforeseen 488. The Appellate Body in Argentina - Footwear (EC) subsequently found that its approach was also confirmed by the context of the provisions at issue. It noted that the remedy provided by Article XIX is of an emergency character and is to be "invoked only in situations when, as a result of obligations incurred under the GATT 1994, a Member finds itself confronted with developments it had not "foreseen" or "expected" when it incurred that obligation": "As part of the context of paragraph 1(a) of Article XIX, we note that the title of Article XIX is: 'Emergency Action on Imports of Particular Products'. The words 'emergency action' also appear in Article 11.1(a) of the Agreement on Safeguards. We note once again, that Article XIX:1(a) requires that a product be imported 'in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers'. (emphasis added) Clearly, this is not the language of ordinary events in routine commerce. In our view, the text of Article XIX:1(a) of the GATT 1994, read in its ordinary meaning and in its context, demonstrates that safeguard measures were intended by the drafters of the GATT to be matters out of the ordinary, to be matters of urgency, to be, in short, 'emergency actions.' And, such 'emergency actions' are to be invoked only in situations when, as a result of obligations incurred under the GATT 1994, a Member finds itself confronted with developments it had not 'foreseen' or 'expected' when it incurred that obligation. The remedy that Article XIX:1(a) allows in this situation is temporarily to 'suspend the obligation in whole or in part or to withdraw or modify the concession'. Thus, Article XIX is clearly, and in every way, an extraordinary remedy."(672) 489. After finding support for its approach in the context of the relevant provisions, the Appellate Body in Argentina - Footwear (EC) held that the object and purpose of Article XIX also confirmed its interpretation: "This reading of these phrases is also confirmed by the object and purpose of Article XIX of the GATT 1994. The object and purpose of Article XIX is, quite simply, to allow a Member to re-adjust temporarily the balance in the level of concessions between that Member and other exporting Members when it is faced with 'unexpected' and, thus, 'unforeseen' circumstances which lead to the product 'being imported' in 'such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers of like or directly competitive products'. In perceiving and applying this object and purpose to the interpretation of this provision of the WTO Agreement, it is essential to keep in mind that a safeguard action is a 'fair' trade remedy. The application of a safeguard measure does not depend upon 'unfair' trade actions, as is the case with anti-dumping or countervailing measures. Thus, the import restrictions that are imposed on products of exporting Members when a safeguard action is taken must be seen, as we have said, as extraordinary. And, when construing the prerequisites for taking such actions, their extraordinary nature must be taken into account."(673) 490. Gaining approval for its interpretative approach to the term "as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions ..." in both the context and the object and purpose of the relevant provision, the Appellate Body in Argentina - Footwear (EC) finally noted a GATT Panel Report, which it also found to confirm its analysis: "In addition, we note that our reading of the clause - 'as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions ... ' - in Article XIX:1(a) is also consistent with the one GATT 1947 case that involved Article XIX, the so-called 'Hatters' Fur' case.(674) Members of the Working Party in that case, in 1951, stated:
... 'unforeseen developments' should be interpreted to mean developments occurring after the negotiation of the relevant tariff concession which it would not be reasonable to expect that the negotiators of the country making the concession could and should have foreseen at the time when the concession was negotiated.(675)"(676) Investigating authorities' duty to include "unforeseen developments" in the published report 491. In US - Lamb, the Appellate Body ruled that the existence of "unforeseen developments" is a "pertinent issue of fact and law" under Article 3.1 of the Safeguards Agreement, and "it follows that the published report of the competent authorities, under that Article, must contain a 'finding' or 'reasoned conclusion' on unforeseen developments"(677): "[W]e observe that Article 3.1 requires competent authorities to set forth findings and reasoned conclusions on 'all pertinent issues of fact and law' in their published report. As Article XIX:1(a) of the GATT 1994 requires that 'unforeseen developments' must be demonstrated' as a matter of fact' for a safeguard measure to be applied' the existence of 'unforeseen developments' is, in our view, a 'pertinent issue[] of fact and law', under Article 3.1, for the application of a safeguard measure, and it follows that the published report of the competent authorities, under that Article, must contain a 'finding' or 'reasoned conclusion' on 'unforeseen developments.'"(678) 492. In Chile - Price Band System, the Panel referred to the Appellate Body's conclusions in US - Lamb that "unforeseen developments" is a circumstance whose existence must be demonstrated as a matter of fact and must feature in the published report of the investigating authorities.(679) The Panel also ruled that ex post facto explanation cannot cure the importing Member's failure to meet the requirement of demonstrating "unforeseen development".(680) Judicial economy 493. In Argentina - Footwear (EC), the European Communities appealed the Panel's finding on judicial economy as regards the absence of findings by the Panel on the European Communities claim on unforeseen developments. The Appellate Body upheld the Panel's findings that the safeguards investigation at issue was inconsistent with the requirements of Articles 2 and 4 of the Agreement on Safeguards and concluded that, since such an inconsistency deprived the measure of legal basis, "there was no need to go further and examine whether, in addition, the measure was also inconsistent with Article XIX:1(a) of GATT 1994".(681) As regards the obligation to apply Article 2.1 of the Agreement on Safeguards and Article XIX:1(a) of GATT 1994 cumulatively, including the requirement to demonstrate "unforeseen developments", see paragraph 484 above. 494. In US - Wheat Gluten, the Appellate Body reiterated the above conclusion, stating that, given the lack of legal basis of the safeguard measure at issue, the Panel was entitled to decline to examine the claim regarding unforeseen developments.(682) (ii) "as a result ... of the effect of the obligations incurred by a Member" 495. With respect to the clause "of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions ..." the Appellate Body held in Argentina - Footwear (EC): "[W]e believe that this phrase simply means that it must be demonstrated, as a matter of fact, that the importing Member has incurred obligations under the GATT 1994, including tariff concessions. Here, we note that the Schedules annexed to the GATT 1994 are made an integral part of Part I of that Agreement, pursuant to paragraph 7 of Article II of the GATT 1994. Therefore, any concession or commitment in a Member's Schedule is subject to the obligations contained in Article II of the GATT 1994."(683) 496. In Argentina - Footwear (EC), the Appellate Body described the requirement "as a result ... of the effect of the obligations incurred by a Member" as setting forth "certain circumstances which must be demonstrated as a matter of fact in order for a safeguard measure to be applied consistently with the provisions of Article XIX of the GATT 1994". See paragraph 487 above. 497. With respect to the significance of the context and object and purpose of Article XIX for the interpretation of the term "as a result ... of the effect of the obligations incurred by a Member", see paragraphs 487-489 above. With respect to a GATT Panel Report on this issue, see paragraph 490 above. 498. As regards the interpretation of the element "unforeseen developments" under Article XIX and the Agreement on Safeguards, see the Chapter on the Agreement on Safeguards, paragraphs 6 and 73. (iii) "being imported in such increased quantities ... 499. Concerning the interpretation of the phrase "in such increased quantities" under Article 2.1 of the Agreement on Safeguards, see the Chapter on the Agreement on Safeguards, Section III.B.2(c). 500. As to the interpretation of the phrase "under such conditions" under Article 2.1 of the Agreement on Safeguards, see Chapter on the Agreement on Safeguards, Section III.B.2(d). (v) "as to cause or threaten serious injury to domestic producers" 501. As regards the interpretation of the phrase "serious injury" under Article 2.1 of the Agreement on Safeguards, see the Chapter on the Agreement on Safeguards, Section V.B.1. 502. With respect to the interpretation of the element of "serious injury" under Article 4.1 of the Agreement on Safeguards, see the Chapter on the Agreement on Safeguards, Sections V.B.1-V.B.2. 503. Concerning the interpretation of the element "serious injury" under Article 4.2(a) of the Agreement on Safeguards, see the Chapter on the Agreement on Safeguards, Section V.B.4. 504. As to the causation test to be applied in relating "increased imports" to "serious injury", see the Chapter on the Agreement on Safeguards, Section V.B.5(a). (i) "shall give notice in writing to the Contracting Parties as far as in advance as may be practicable" 505. With regard to the notification requirements and particularly to the interpretation of the phrase "shall immediately notify" under Article 12.1 of the Agreement on Safeguards, see the Chapter on the Agreement on Safeguards, Section XIII.B.2(a). (ii) "an opportunity to consult" 506. With respect to the interpretation of "opportunity for prior consultations" under Article 12.3 of the Agreement on Safeguards, see the Chapter on the Agreement on Safeguards, XIII.B.4(a) 507. Regarding GATT practice on Article XIX, see GATT Analytical Index, pages 516-529. 508. In Korea - Dairy, the Appellate Body examined the relationship between Article XIX of GATT 1994 and the Agreement on Safeguards in light of, on the one hand, Article II of the WTO Agreement(684), and, on the other hand, Articles 1 and 11.1(a) of the Agreement on Safeguards.(685) The Appellate Body concluded that any safeguard measure imposed after the entry into force of the WTO Agreement must comply with the provisions of both Article XIX and the Agreement on Safeguards: "The specific relationship between Article XIX of the GATT 1994 and the Agreement on Safeguards within the WTO Agreement is set forth in Articles 1 and 11.1(a) of the Agreement on Safeguards: ... Article 1 states that the purpose of the Agreement on Safeguards is to establish 'rules for the application of safeguard measures which shall be understood to mean those measures provided for in Article XIX of GATT 1994.' ...The ordinary meaning of the language in Article 11.1(a) - 'unless such action conforms with the provisions of that Article applied in accordance with this Agreement' - is that any safeguard action must conform with the provisions of Article XIX of the GATT 1994 as well as with the provisions of the Agreement on Safeguards. Thus, any safeguard measure(686) imposed after the entry into force of the WTO Agreement must comply with the provisions of both the Agreement on Safeguards and Article XIX of the GATT 1994."(687) 509. In Argentina - Footwear (EC), the Appellate Body reversed a conclusion by the Panel that "safeguard investigations and safeguard measures imposed after the entry into force of the WTO agreements which meet the requirements of the new Safeguards Agreement satisfy the requirements of Article XIX of GATT."(688) The Appellate Body noted that Articles 1 and 11.1(a) of the Agreement on Safeguards described the precise nature of the relationship between Article XIX of GATT 1994 and the Agreement on Safeguards within the WTO Agreement(689), and then observed: "We see nothing in the language of either Article 1 or Article 11.1(a) of the Agreement on Safeguards that suggests an intention by the Uruguay Round negotiators to subsume the requirements of Article XIX of the GATT 1994 within the Agreement on Safeguards and thus to render those requirements no longer applicable. Article 1 states that the purpose of the Agreement on Safeguards is to establish 'rules for the application of safeguard measures which shall be understood to mean those measures provided for in Article XIX of GATT 1994.' ...This suggests that Article XIX continues in full force and effect, and, in fact, establishes certain prerequisites for the imposition of safeguard measures. Furthermore, in Article 11.1(a), the ordinary meaning of the language 'unless such action conforms with the provisions of that Article applied in accordance with this Agreement' ...clearly is that any safeguard action must conform with the provisions of Article XIX of the GATT 1994 as well as with the provisions of the Agreement on Safeguards. Neither of these provisions states that any safeguard action taken after the entry into force of the WTO Agreement need only conform with the provisions of the Agreement on Safeguards.(690)"(691) 510. The Appellate Body in Argentina - Footwear (EC) further rejected the conclusion of the Panel that because the clause "[i]f, as a result of unforeseen developments ... concessions"(692) in Article XIX:1(a) had been expressly omitted from Article 2.1 of the Agreement on Safeguards, safeguard measures that meet the requirements of the Agreement on Safeguards will automatically also satisfy the requirements of Article XIX. The Appellate Body considered this conclusion of the Panel as inconsistent with the principles of effective treaty interpretation(693) and with the ordinary meaning of Articles 1 and 11.1(a) of the Agreement on Safeguards: "[I]t is clear from Articles 1 and 11.1(a) of the Agreement on Safeguards that the Uruguay Round negotiators did not intend that the Agreement on Safeguards would entirely replace Article XIX. Instead, the ordinary meaning of Articles 1 and 11.1(a) of the Agreement on Safeguards confirms that the intention of the negotiators was that the provisions of Article XIX of the GATT 1994 and of the Agreement on Safeguards would apply cumulatively, except to the extent of a conflict between specific provisions ... We do not see this as an issue involving a conflict between specific provisions of two Multilateral Agreements on Trade in Goods. Thus, we are obliged to apply the provisions of Article 2.1 of the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994 cumulatively, in order to give meaning, by giving legal effect, to all the applicable provisions relating to safeguard measures."(694) 511. The Panel on US - Lamb, referring to the statements by the Appellate Body in Argentina - Footwear (EC) and Korea - Dairy, on the relationship between the Agreement on Safeguards and Article XIX of GATT 1994, observed: "Thus the Appellate Body explicitly rejected the idea that those requirements of GATT Article XIX which are not reflected in the Safeguards Agreement could have been superseded by the requirements of the latter and stressed that all of the relevant provisions of the Safeguards Agreement and GATT Article XIX must be given meaning and effect."(695) 512. The Appellate Body Report in US - Lamb reiterated the conclusions drawn by the Appellate Body in Argentina - Footwear (EC) and in Korea - Dairy on the relationship between the Agreement on Safeguards and Article XIX of GATT 1994 and observed: "[A]rticles 1 and 11.1(a) of the Agreement on Safeguards express the full and continuing applicability of Article XIX of the GATT 1994, which no longer stands in isolation, but has been clarified and reinforced by the Agreement on Safeguards."(696) 513. Concerning the possibility of resorting to judicial economy as regards claims of unforeseen developments in cases where it has found that the requirements of Article 2 and 4 of the Agreement on Safeguards have not been met, see paragraphs 493-494 above.
XXI. Article XX back to top Article XX: General Exceptions Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:
(a) necessary to protect public morals;
(b) necessary to protect human, animal or plant life or health;
(c) relating to the importations or exportations of gold or silver;
(d) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, including those relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, the protection of patents, trade marks and copyrights, and the prevention of deceptive practices;
(e) relating to the products of prison labour;
(f) imposed for the protecstion of national treasures of artistic, historic or archaeological value;
(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption;
(h) undertaken in pursuance of obligations under any intergovernmental commodity agreement which conforms to criteria submitted to the CONTRACTING PARTIES and not disapproved by them or which is itself so submitted and not so disapproved;*
(i) involving restrictions on exports of domestic materials necessary to ensure essential quantities of such materials to a domestic processing industry during periods when the domestic price of such materials is held below the world price as part of a governmental stabilization plan; Provided that such restrictions shall not operate to increase the exports of or the protection afforded to such domestic industry, and shall not depart from the provisions of this Agreement relating to non-discrimination;
(j) essential to the acquisition or distribution of products in general or local short supply; Provided that any such measures shall be consistent with the principle that all contracting parties are entitled to an equitable share of the international supply of such products, and that any such measures, which are inconsistent with the other provisions of the Agreement shall be discontinued as soon as the conditions giving rise to them have ceased to exist. The CONTRACTING PARTIES shall review the need for this sub-paragraph not later than 30 June 1960. Ad Article XX: Subparagraph (h) The exception provided for in this subparagraph extends to any commodity agreement which conforms to the principles approved by the Economic and Social Council in its resolution 30 (IV) of 28 March 1947. (a) Nature and purpose of Article XX 514. In US - Gasoline, in discussing the preambular language (the "chapeau") of Article XX, the Appellate Body stated: "[T]he chapeau says that 'nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures ...' The exceptions listed in Article XX thus relate to all of the obligations under the General Agreement: the national treatment obligation and the most-favoured-nation obligation, of course, but others as well."(697) 515. In US - Shrimp, the Appellate Body examined the GATT-consistency of the import ban on shrimp and shrimp products from exporting nations not certified by United States authorities. Such certification could be obtained, inter alia, where the foreign country could demonstrate that shrimp or shrimp products were being caught using methods which did not lead to incidental killing of turtles beyond a certain level. The Panel had found that the measure at issue could not be justified under Article XX, because Article XX could not serve to justify "measures conditioning access to its market for a given product upon the adoption by the exporting Members of certain policies". The Appellate Body disagreed with this interpretation of the scope of Article XX and stated: "[C]onditioning access to a Member's domestic market on whether exporting Members comply with, or adopt, a policy or policies unilaterally prescribed by the importing Member may, to some degree, be a common aspect of measures falling within the scope of one or another of the exceptions (a) to (j) of Article XX. Paragraphs (a) to (j) comprise measures that are recognized as exceptions to substantive obligations established in the GATT 1994, because the domestic policies embodied in such measures have been recognized as important and legitimate in character. It is not necessary to assume that requiring from exporting countries compliance with, or adoption of, certain policies (although covered in principle by one or another of the exceptions) prescribed by the importing country, renders a measure a priori incapable of justification under Article XX. Such an interpretation renders most, if not all, of the specific exceptions of Article XX inutile, a result abhorrent to the principles of interpretation we are bound to apply."(698) 516. In US - Shrimp, interpreting the chapeau of Article XX, the Appellate Body described the nature and purpose of Article XX as a balance of rights and duties: "[A] balance must be struck between the right of a Member to invoke an exception under Article XX and the duty of that same Member to respect the treaty rights of the other Members.
The task of interpreting and applying the chapeau is, hence, essentially the delicate one of locating and marking out a line of equilibrium between the right of a Member to invoke an exception under Article XX and the rights of the other Members under varying substantive provisions (e.g., Article XI) of the GATT 1994, so that neither of the competing rights will cancel out the other and thereby distort and nullify or impair the balance of rights and obligations constructed by the Members themselves in that Agreement. The location of the line of equilibrium, as expressed in the chapeau, is not fixed and unchanging; the line moves as the kind and the shape of the measures at stake vary and as the facts making up specific cases differ."(699) 517. In US - Gasoline, the Appellate Body concluded its analysis by emphasizing the function of Article XX with respect to national measures taken for environmental protection: "It is of some importance that the Appellate Body point out what this does not mean. It does not mean, or imply, that the ability of any WTO Member to take measures to control air pollution or, more generally, to protect the environment, is at issue. That would be to ignore the fact that Article XX of the General Agreement contains provisions designed to permit important state interests - including the protection of human health, as well as the conservation of exhaustible natural resources - to find expression. The provisions of Article XX were not changed as a result of the Uruguay Round of Multilateral Trade Negotiations. Indeed, in the preamble to the WTO Agreement and in the Decision on Trade and Environment,(700) there is specific acknowledgement to be found about the importance of coordinating policies on trade and the environment. WTO Members have a large measure of autonomy to determine their own policies on the environment (including its relationship with trade), their environmental objectives and the environmental legislation they enact and implement. So far as concerns the WTO, that autonomy is circumscribed only by the need to respect the requirements of the General Agreement and the other covered agreements."(701) 518. In US - Gasoline, the Appellate Body examined the Panel's findings that the United States regulation concerning the quality of gasoline was inconsistent with GATT Article III:4 and not justified under either paragraph (b), (d) or (g) of Article XX. The Appellate Body presented a two-tiered test under Article XX: "In order that the justifying protection of Article XX may be extended to it, the measure at issue must not only come under one or another of the particular exceptions - paragraphs (a) to (j) - listed under Article XX; it must also satisfy the requirements imposed by the opening clauses of Article XX. The analysis is, in other words, two-tiered: first, provisional justification by reason of characterization of the measure under XX(g); second, further appraisal of the same measure under the introductory clauses of Article XX."(702) 519. In US - Shrimp, the Appellate Body reviewed the Panel's finding concerning an import ban on shrimp and shrimp products harvested by foreign vessels. The ban applied to shrimp and shrimp products where the exporting country had not been certified by United States authorities as using methods not leading to incidental killing of sea turtles above a certain level. The Panel found a violation of Article III and held that the United States measure was not within the scope of measures permitted under the chapeau of Article XX. As a result of its finding that the United States measure could not be justified under the terms of the chapeau, the Panel did not examine the import ban in the light of Articles XX (b) and XX(g). The Appellate Body referred to its finding in US - Gasoline, cited in paragraph 518 above, and emphasized the need to follow the sequence of steps as set out in that Report: "The sequence of steps indicated above in the analysis of a claim of justification under Article XX reflects, not inadvertence or random choice, but rather the fundamental structure and logic of Article XX. The Panel appears to suggest, albeit indirectly, that following the indicated sequence of steps, or the inverse thereof, does not make any difference. To the Panel, reversing the sequence set out in United States - Gasoline 'seems equally appropriate.'(703) We do not agree.
The task of interpreting the chapeau so as to prevent the abuse or misuse of the specific exemptions provided for in Article XX is rendered very difficult, if indeed it remains possible at all, where the interpreter (like the Panel in this case) has not first identified and examined the specific exception threatened with abuse. The standards established in the chapeau are, moreover, necessarily broad in scope and reach: the prohibition of the application of a measure 'in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail' or 'a disguised restriction on international trade.'(emphasis added) When applied in a particular case, the actual contours and contents of these standards will vary as the kind of measure under examination varies."(704) (ii) Language of paragraphs (a) to (i) 520. In US - Gasoline, the Appellate Body compared the terms used in paragraphs (a) to (i) of Article XX, emphasizing that different terms are used in respect of the different categories of measures described in paragraphs (a) to (i): "Applying the basic principle of interpretation that the words of a treaty, like the General Agreement, are to be given their ordinary meaning, in their context and in the light of the treaty's object and purpose, the Appellate Body observes that the Panel Report failed to take adequate account of the words actually used by Article XX in its several paragraphs. In enumerating the various categories of governmental acts, laws or regulations which WTO Members may carry out or promulgate in pursuit of differing legitimate state policies or interests outside the realm of trade liberalization, Article XX uses different terms in respect of different categories:
'necessary' - in paragraphs (a), (b) and (d); 'essential' - in paragraph (j); 'relating to' - in paragraphs (c), (e) and (g); 'for the protection of' - in paragraph (f); 'in pursuance of' - in paragraph (h); and 'involving' - in paragraph (i).
It does not seem reasonable to suppose that the WTO Members intended to require, in respect of each and every category, the same kind or degree of connection or relationship between the measure under appraisal and the state interest or policy sought to be promoted or realized." (705) 521. In US - Gasoline, the Appellate Body differentiated between the burden of proof under the individual paragraphs of Article XX on the one hand, and under the chapeau of Article XX on the other: "The burden of demonstrating that a measure provisionally justified as being within one of the exceptions set out in the individual paragraphs of Article XX does not, in its application, constitute abuse of such exception under the chapeau, rests on the party invoking the exception. That is, of necessity, a heavier task than that involved in showing that an exception, such as Article XX(g), encompasses the measure at issue."(706) 522. The Panel on EC - Asbestos, in a statement not reviewed by the Appellate Body, elaborated on the burden of proof under Article XX in the context of a defence based on Article XX(b): "We consider that the reasoning of the Appellate Body in United States - Shirts and Blouses from India(707) is applicable to Article XX, inasmuch as the invocation of that Article constitutes a 'defence' in the sense in which that word is used in the above-mentioned report. It is therefore for the European Communities to submit in respect of this defence a prima facie case showing that the measure is justified. Of course, as the Appellate Body pointed out in United States - Gasoline, the burden on the European Communities could vary according to what has to be proved. It will then be for Canada to rebut that prima facie case, if established.
If we mention this working rule at this stage, it is because it could play a part in our assessment of the evidence submitted by the parties. Thus, the fact that a party invokes Article XX does not mean that it does not need to supply the evidence necessary to support its allegation. Similarly, it does not release the complaining party from having to supply sufficient arguments and evidence in response to the claims of the defending party. Moreover, we are of the opinion that it is not for the party invoking Article XX to prove that the arguments put forward in rebuttal by the complaining party are incorrect until the latter has backed them up with sufficient evidence.(708)"(709) 523. The Panel on EC - Asbestos, in a finding not addressed by the Appellate Body, further discussed the burden of proof specifically regarding the scientific aspect of the measure at issue. The Panel chose to confine itself to the provisions of the GATT 1994 and to the criteria defined by the practice relating to the application of GATT Article XX rather than to extend the principles of the SPS Agreement to examination under Article XX:(710) "[I]n relation to the scientific information submitted by the parties and the experts, the Panel feels bound to point out that it is not its function to settle a scientific debate, not being composed of experts in the field of the possible human health risks posed by asbestos. Consequently, the Panel does not intend to set itself up as an arbiter of the opinions expressed by the scientific community.
Its role, taking into account the burden of proof, is to determine whether there is sufficient scientific evidence to conclude that there exists a risk for human life or health and that the measures taken by France are necessary in relation to the objectives pursued. The Panel therefore considers that it should base its conclusions with respect to the existence of a public health risk on the scientific evidence put forward by the parties and the comments of the experts consulted within the context of the present case. The opinions expressed by the experts we have consulted will help us to understand and evaluate the evidence submitted and the arguments advanced by the parties.(711) The same approach will be adopted with respect to the necessity of the measure concerned."(712) 2. Preamble of Article XX (the "chapeau") 524. In US - Gasoline, the Appellate Body held that the chapeau has been worded so to prevent the abuse of the exceptions under Article XX: "The chapeau by its express terms addresses, not so much the questioned measure or its specific contents as such, but rather the manner in which that measure is applied.(713) It is, accordingly, important to underscore that the purpose and object of the introductory clauses of Article XX is generally the prevention of 'abuse of the exceptions of [what was later to become] Article [XX].'(714) This insight drawn from the drafting history of Article XX is a valuable one. The chapeau is animated by the principle that while the exceptions of Article XX may be invoked as a matter of legal right, they should not be so applied as to frustrate or defeat the legal obligations of the holder of the right under the substantive rules of the General Agreement. If those exceptions are not to be abused or misused, in other words, the measures falling within the particular exceptions must be applied reasonably, with due regard both to the legal duties of the party claiming the exception and the legal rights of the other parties concerned."(715) 525. In US - Shrimp, the Appellate Body elaborated on the notion of preventing abuse or misuse of the exceptions under Article XX. The Appellate Body found that "a balance must be struck between the right of a Member to invoke an exception under Article XX and the duty of that same Member to respect the treaty rights of the other Members"(716), as referenced in paragraph 516 above, and went on to state: "In our view, the language of the chapeau makes clear that each of the exceptions in paragraphs (a) to (j) of Article XX is a limited and conditional exception from the substantive obligations contained in the other provisions of the GATT 1994, that is to say, the ultimate availability of the exception is subject to the compliance by the invoking Member with the requirements of the chapeau.(717) This interpretation of the chapeau is confirmed by its negotiating history.(718) The language initially proposed by the United States in 1946 for the chapeau of what would later become Article XX was unqualified and unconditional.(719) Several proposals were made during the First Session of the Preparatory Committee of the United Nations Conference on Trade and Employment in 1946 suggesting modifications.(720) In November 1946, the United Kingdom proposed that "in order to prevent abuse of the exceptions of Article 32 [which would subsequently become Article XX]", the chapeau of this provision should be qualified.(721) This proposal was generally accepted, subject to later review of its precise wording. Thus, the negotiating history of Article XX confirms that the paragraphs of Article XX set forth limited and conditional exceptions from the obligations of the substantive provisions of the GATT. Any measure, to qualify finally for exception, must also satisfy the requirements of the chapeau. This is a fundamental part of the balance of rights and obligations struck by the original framers of the GATT 1947."(722) 526. The Appellate Body then linked the balance of rights and obligations under the chapeau of Article XX to the general principle of good faith: "The chapeau of Article XX is, in fact, but one expression of the principle of good faith. This principle, at once a general principle of law and a general principle of international law, controls the exercise of rights by states. One application of this general principle, the application widely known as the doctrine of abus de droit, prohibits the abusive exercise of a state's rights and enjoins that whenever the assertion of a right "impinges on the field covered by [a] treaty obligation, it must be exercised bona fide, that is to say, reasonably."(723) An abusive exercise by a Member of its own treaty right thus results in a breach of the treaty rights of the other Members and, as well, a violation of the treaty obligation of the Member so acting. Having said this, our task here is to interpret the language of the chapeau, seeking additional interpretative guidance, as appropriate, from the general principles of international law.
The task of interpreting and applying the chapeau is, hence, essentially the delicate one of loca72ting and marking out a line of equilibrium between the right of a Member to invoke an exception under Article XX and the rights of the other Members under varying substantive provisions (e.g., Article XI) of the GATT 1994, so that neither of the competing rights will cancel out the other and thereby distort and nullify or impair the balance of rights and obligations constructed by the Members themselves in that Agreement. The location of the line of equilibrium, as expressed in the chapeau, is not fixed and unchanging; the line moves as the kind and the shape of the measures at stake vary and as the facts making up specific cases differ."(724) 527. In US - Shrimp, before elaborating on the general significance of the chapeau of Article XX, as quoted in paragraphs 525-526 above, the Appellate Body discussed the significance of the Preamble of the WTO Agreement for its interpretative approach to the chapeau: "[The language of the WTO Preamble] demonstrates a recognition by WTO negotiators that optimal use of the world's resources should be made in accordance with the objective of sustainable development. As this preambular language reflects the intentions of negotiators of the WTO Agreement, we believe it must add colour, texture and shading to our interpretation of the agreements annexed to the WTO Agreement, in this case, the GATT 1994. We have already observed that Article XX(g) of the GATT 1994 is appropriately read with the perspective embodied in the above preamble.
We also note that since this preambular language was negotiated, certain other developments have occurred which help to elucidate the objectives of WTO Members with respect to the relationship between trade and the environment. The most significant, in our view, was the Decision of Ministers at Marrakesh to establish a permanent Committee on Trade and Environment (the 'CTE'). ... [W]e must fulfill our responsibility in this specific case, which is to interpret the existing language of the chapeau of Article XX by examining its ordinary meaning, in light of its context and object and purpose in order to determine whether the United States measure at issue qualifies for justification under Article XX. It is proper for us to take into account, as part of the context of the chapeau, the specific language of the preamble to the WTO Agreement, which, we have said, gives colour, texture and shading to the rights and obligations of Members under the WTO Agreement, generally, and under the GATT 1994, in particular."(725) (b) "arbitrary or unjustifiable discrimination between countries where the same conditions prevail" 528. The Appellate Body in US - Shrimp provided an overview regarding the three constitutive elements of the concept of "arbitrary or unjustifiable discrimination between countries where the same conditions prevail": "In order for a measure to be applied in a manner which would constitute "arbitrary or unjustifiable discrimination between countries where the same conditions prevail", three elements must exist. First, the application of the measure must result in discrimination. As we stated in United States - Gasoline, the nature and quality of this discrimination is different from the discrimination in the treatment of products which was already found to be inconsistent with one of the substantive obligations of the GATT 1994, such as Articles I, III or XI.(726) Second, the discrimination must be arbitrary or unjustifiable in character. We will examine this element of arbitrariness or unjustifiability in detail below. Third, this discrimination must occur between countries where the same conditions prevail. In United States - Gasoline, we accepted the assumption of the participants in that appeal that such discrimination could occur not only between different exporting Members, but also between exporting Members and the importing Member concerned.(727)"(728) (ii) Type of discrimination covered by the chapeau 529. With respect to the phrase "between countries where the same conditions prevail", the question arose whether the notion of discrimination under the chapeau of Article XX referred to conditions in importing or exporting countries (i.e. discrimination between a foreign country or foreign countries on the one hand and the home country on the other) or only to conditions in various exporting countries. The Appellate Body in US - Gasoline indicated that it considered both types of discrimination covered by the chapeau: "[The United States] was asked whether the words incorporated into the first two standards 'between countries where the same conditions prevail' refer to conditions in importing and exporting countries, or only to conditions in exporting countries. The reply of the United States was to the effect that it interpreted that phrase as referring to both the exporting countries and importing countries and as between exporting countries. ... At no point in the appeal was that assumption challenged by Venezuela or Brazil. ...
The assumption on which all the participants proceeded is buttressed by the fact that the chapeau says that 'nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures ...' The exceptions listed in Article XX thus relate to all of the obligations under the General Agreement: the national treatment obligation and the most-favoured-nation obligation, of course, but others as well. Effect is more easily given to the words 'nothing in this Agreement', and Article XX as a whole including its chapeau more easily integrated into the remainder of the General Agreement, if the chapeau is taken to mean that the standards it sets forth are applicable to all of the situations in which an allegation of a violation of a substantive obligation has been made and one of the exceptions contained in Article XX has in turn been claimed.
[W]e see no need to decide the matter of the field of application of the standards set forth in the chapeau nor to make a ruling at variance with the common understanding of the participants.(729)"(730) 530. In US - Shrimp, the Appellate Body confirmed its finding in US - Gasoline on the type of discrimination covered by the chapeau Article XX: "In United States - Gasoline, we accepted the assumption of the participants in that appeal that such discrimination could occur not only between different exporting Members, but also between exporting Members and the importing Member concerned."(731) (iii) Standard of discrimination 531. The Appellate Body in US - Gasoline considered the appropriate discrimination standard relevant under the chapeau Article XX and held that this standard must be different from the standard applied under Article III:4: "The enterprise of applying Article XX would clearly be an unprofitable one if it involved no more than applying the standard used in finding that the baseline establishment rules were inconsistent with Article III:4. That would also be true if the finding were one of inconsistency with some other substantive rule of the General Agreement. The provisions of the chapeau cannot logically refer to the same standard(s) by which a violation of a substantive rule has been determined to have occurred. To proceed down that path would be both to empty the chapeau of its contents and to deprive the exceptions in paragraphs (a) to (j) of meaning. Such recourse would also confuse the question of whether inconsistency with a substantive rule existed, with the further and separate question arising under the chapeau of Article XX as to whether that inconsistency was nevertheless justified. One of the corollaries of the 'general rule of interpretation' in the Vienna Convention is that interpretation must give meaning and effect to all the terms of a treaty. An interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility.
The chapeau, it will be seen, prohibits such application of a measure at issue (otherwise falling within the scope of Article XX(g)) as would constitute
(a) 'arbitrary discrimination' (between countries where the same conditions prevail);
(b) 'unjustifiable discrimination' (with the same qualifier); or
(c) 'disguised restriction' on international trade.
The text of the chapeau is not without ambiguity, including one relating to the field of application of the standards its contains: the arbitrary or unjustifiable discrimination standards and the disguised restriction on international trade standard. It may be asked whether these standards do not have different fields of application."(732) 532. After noting that "[t]he enterprise of applying Article XX would clearly be an unprofitable one if it involved no more than applying the standard used in finding that the baseline establishment rules were inconsistent with Article III:4" as referenced in paragraph 531 above, the Appellate Body in US - Gasoline examined the United States conduct with respect to other Members' governments and its failure to consider the costs imposed by its measures upon foreign refiners. The Appellate Body then held that these "two omissions go well beyond what was necessary for the Panel to determine that a violation of Article III:4 had occurred in the first place": "We have above located two omissions on the part of the United States: to explore adequately means, including in particular cooperation with the governments of Venezuela and Brazil, of mitigating the administrative problems relied on as justification by the United States for rejecting individual baselines for foreign refiners; and to count the costs for foreign refiners that would result from the imposition of statutory baselines. In our view, these two omissions go well beyond what was necessary for the Panel to determine that a violation of Article III:4 had occurred in the first place. The resulting discrimination must have been foreseen, and was not merely inadvertent or unavoidable. In the light of the foregoing, our conclusion is that the baseline establishment rules in the Gasoline Rule, in their application, constitute 'unjustifiable discrimination' and a 'disguised restriction on international trade.' We hold, in sum, that the baseline establishment rules, although within the terms of Article XX(g), are not entitled to the justifying protection afforded by Article XX as a whole."(733) 533. In US - Shrimp, the Appellate Body listed three elements of "arbitrary or unjustifiable discrimination" within the meaning of the chapeau of Article XX. See also paragraph 528 above. In respect of the first element, it reiterated its findings from US - Gasoline concerning the difference in discrimination under the chapeau of Article XX and other GATT provisions: "As we stated in United States - Gasoline, the nature and quality of this discrimination is different from the discrimination in the treatment of products which was already found to be inconsistent with one of the substantive obligations of the GATT 1994, such as Articles I, III or XI.(734)"(735) (iv) Examples of arbitrary and unjustifiable discrimination 534. In US - Shrimp, in analysing the United States measure at issue in the light of the chapeau of Article XX, the Appellate Body noted the "intended and actual coercive effect on other governments" to "adopt essentially the same policy" as the United States: "Perhaps the most conspicuous flaw in this measure's application relates to its intended and actual coercive effect on the specific policy decisions made by foreign governments, Members of the WTO. Section 609, in its application, is, in effect, an economic embargo which requires all other exporting Members, if they wish to exercise their GATT rights, to adopt essentially the same policy (together with an approved enforcement program) as that applied to, and enforced on, United States domestic shrimp trawlers."(736) 535. The Appellate Body acknowledged that "the United States ... applie[d] a uniform standard throughout its territories regardless of the particular conditions existing in certain parts of the country"(737), but held that such a uniform standard cannot be permissible in international trade relations. The Appellate Body held that "discrimination exists", inter alia, "when the application of the measure at issue does not allow for any inquiry into the appropriateness of the regulatory programme for the conditions prevailing in those exporting countries": "It may be quite acceptable for a government, in adopting and implementing a domestic policy, to adopt a single standard applicable to all its citizens throughout that country. However, it is not acceptable, in international trade relations, for one WTO Member to use an economic embargo to require other Members to adopt essentially the same comprehensive regulatory program, to achieve a certain policy goal, as that in force within that Member's territory, without taking into consideration different conditions which may occur in the territories of those other Members.
Furthermore, when this dispute was before the Panel and before us, the United States did not permit imports of shrimp harvested by commercial shrimp trawl vessels using TEDs comparable in effectiveness to those required in the United States if those shrimp originated in waters of countries not certified under Section 609. In other words, shrimp caught using methods identical to those employed in the United States have been excluded from the United States market solely because they have been caught in waters of countries that have not been certified by the United States. The resulting situation is difficult to reconcile with the declared policy objective of protecting and conserving sea turtles. This suggests to us that this measure, in its application, is more concerned with effectively influencing WTO Members to adopt essentially the same comprehensive regulatory regime as that applied by the United States to its domestic shrimp trawlers, even though many of those Members may be differently situated. We believe that discrimination results not only when countries in which the same conditions prevail are differently treated, but also when the application of the measure at issue does not allow for any inquiry into the appropriateness of the regulatory program for the conditions prevailing in those exporting countries."(738) 536. The Appellate Body in US - Shrimp further criticised the "single, rigid and unbending requirement" that countries applying for certification - required under the United States measure at issue in order to import shrimps into the United States - were faced with. The Appellate Body also noted a lack of flexibility in how officials were making the determination for certification: "Section 609, in its application, imposes a single, rigid and unbending requirement that countries applying for certification under Section 609(b)(2)(A) and (B) adopt a comprehensive regulatory program that is essentially the same as the United States program, without inquiring into the appropriateness of that program for the conditions prevailing in the exporting countries. Furthermore, there is little or no flexibility in how officials make the determination for certification pursuant to these provisions. In our view, this rigidity and inflexibility also constitute 'arbitrary discrimination' within the meaning of the chapeau."(739) 537. Another aspect which the Appellate Body in US - Shrimp considered in determining whether the United States measure at issue constituted "arbitrary or unjustifiable discrimination between countries where the same conditions prevail" was the concept of "due process". The Appellate Body found that the procedures under which United States authorities were granting the certification which foreign countries were required to obtain in order for their nationals to import shrimps into the United States were "informal" and "casual" and not "transparent" and "predictable: "[W]ith respect to neither type of certification under [the measure at issue requiring certification] is there a transparent, predictable certification process that is followed by the competent United States government officials. The certification processes under Section 609 consist principally of administrative ex parte inquiry or verification by staff of the Office of Marine Conservation in the Department of State with staff of the United States National Marine Fisheries Service. With respect to both types of certification, there is no formal opportunity for an applicant country to be heard, or to respond to any arguments that may be made against it, in the course of the certification process before a decision to grant or to deny certification is made. Moreover, no formal written, reasoned decision, whether of acceptance or rejection, is rendered on applications for either type of certification, whether under Section 609(b)(2)(A) and (B) or under Section 609(b)(2)(C). Countries which are granted certification are included in a list of approved applications published in the Federal Register; however, they are not notified specifically. Countries whose applications are denied also do not receive notice of such denial (other than by omission from the list of approved applications) or of the reasons for the denial. No procedure for review of, or appeal from, a denial of an application is provided.
The certification processes followed by the United States thus appear to be singularly informal and casual, and to be conducted in a manner such that these processes could result in the negation of rights of Members. There appears to be no way that exporting Members can be certain whether the terms of Section 609, in particular, the 1996 Guidelines, are being applied in a fair and just manner by the appropriate governmental agencies of the United States. It appears to us that, effectively, exporting Members applying for certification whose applications are rejected are denied basic fairness and due process, and are discriminated against, vis-à-vis those Members which are granted certification."(740) (c) "disguised restriction on international trade" 538. In US - Gasoline, the Appellate Body held that the concepts of "arbitrary or unjustifiable discrimination" and "disguised restriction on international trade" were related concepts which "imparted meaning to one another": "'Arbitrary discrimination', 'unjustifiable discrimination' and 'disguised restriction' on international trade may, accordingly, be read side-by-side; they impart meaning to one another. It is clear to us that 'disguised restriction' includes disguised discrimination in international trade. It is equally clear that concealed or unannounced restriction or discrimination in international trade does not exhaust the meaning of 'disguised restriction.' We consider that 'disguised restriction', whatever else it covers, may properly be read as embracing restrictions amounting to arbitrary or unjustifiable discrimination in international trade taken under the guise of a measure formally within the terms of an exception listed in Article XX. Put in a somewhat different manner, the kinds of considerations pertinent in deciding whether the application of a particular measure amounts to 'arbitrary or unjustifiable discrimination', may also be taken into account in determining the presence of a 'disguised restriction' on international trade. The fundamental theme is to be found in the purpose and object of avoiding abuse or illegitimate use of the exceptions to substantive rules available in Article XX."(741) 539. See also the excerpt from the report of the Appellate Body in US - Gasoline referenced in paragraph 532 above. (d) Reference to GATT practice 540. With respect to GATT practice on the Preamble of Article XX, see GATT Analytical Index, pages 563-565. 541. The Panel on US - Gasoline, in a finding not reviewed by the Appellate Body, presented the following three-tier test in respect of Article XX(b): "[A]s the party invoking an exception the United States bore the burden of proof in demonstrating that the inconsistent measures came within its scope. The Panel observed that the United States therefore had to establish the following elements:
(1) that the policy in respect of the measures for which the provision was invoked fell within the range of policies designed to protect human, animal or plant life or health;
(2) that the inconsistent measures for which the exception was being invoked were necessary to fulfil the policy objective; and
(3) that the measures were applied in conformity with the requirements of the introductory clause of Article XX.
In order to justify the application of Article XX(b), all the above elements had to be satisfied."(742) (i) Aspect of measure to be justified as "necessary" 542. In US - Gasoline, the Panel addressed the question of which specific aspect of a measure under scrutiny should be justified as "necessary" within the meaning of paragraph (b) of Article XX. The Panel held that "it was not the necessity of the policy goal that was to be examined, but whether or not it was necessary that imported gasoline be effectively prevented from benefitting from as favourable sales conditions as were afforded by an individual baseline tied to the producer of a product". The Appellate Body did not address the Panel's findings on paragraph (b). However, in addressing the Panel's findings on paragraph (g), more specifically the Panel's statements concerning the terms "relating to" and "primarily aimed at", the Appellate Body was critical that "the Panel [had] asked itself whether the 'less favourable treatment' of imported gasoline was 'primarily aimed at' the conservation of natural resources, rather than whether the 'measure', i.e. the baseline establishment rules, were 'primarily aimed at' conservation of clean air." The Appellate Body found that "the Panel ... was in error in referring to its legal conclusion on Article III:4 instead of the measure in issue."(743) (ii) Treatment of scientific data and risk assessment 543. In EC - Asbestos, the Panel found that the measure at issue, a French ban on the manufacture, importation and exportation, and domestic sale and transfer of certain asbestos products including products containing chrysotile fibres, was inconsistent with GATT Article III:4, but justified under Article XX(b) in light of the underlying policy of prohibiting chrysotile asbestos in order to protect human life and health. The Appellate Body rejected Canada's argument under Article XX(b) that the Panel erred in law by deducing that chrysotile-cement products pose a risk to human life or health. The Appellate Body referred to Article 11 of the DSU and its reports on US - Wheat Gluten(744) and Korea - Alcoholic Beverages(745), and stated: "The Panel enjoyed a margin of discretion in assessing the value of the evidence, and the weight to be ascribed to that evidence. The Panel was entitled, in the exercise of its discretion, to determine that certain elements of evidence should be accorded more weight than other elements - that is the essence of the task of appreciating the evidence."(746) 544. Further, in EC - Asbestos, Canada argued that Article 11 of the DSU requires that the scientific data must be assessed in accordance with the principle of the balance of probabilities, and that in particular where the evidence is divergent or contradictory, a Panel must take a position as to the respective weight of the evidence by virtue of the principle of the preponderance of the evidence. The Appellate Body rejected this argument, pointing out: "As we have already noted, '[w]e cannot second-guess the Panel in appreciating either the evidentiary value of ... studies or the consequences, if any, of alleged defects in [the evidence]'.(747) And, as we have already said, in this case, the Panel's appreciation of the evidence remained well within the bounds of its discretion as the trier of facts.
In addition, in the context of the SPS Agreement, we have said previously, in European Communities - Hormones, that 'responsible and representative governments may act in good faith on the basis of what, at a given time, may be a divergent opinion coming from qualified and respected sources.'(748) (emphasis added) In justifying a measure under Article XX(b) of the GATT 1994, a Member may also rely, in good faith, on scientific sources which, at that time, may represent a divergent, but qualified and respected, opinion. A Member is not obliged, in setting health policy, automatically to follow what, at a given time, may constitute a majority scientific opinion. Therefore, a panel need not, necessarily, reach a decision under Article XX(b) of the GATT 1994 on the basis of the 'preponderant' weight of the evidence."(749) 545. In EC - Asbestos, the Appellate Body also rejected Canada's argument that in examining whether the French ban on manufacture, sale and imports of certain asbestos products including chrysotile-cement products was justified under GATT Article XX(b), the Panel should have quantified the risk associated with chrysotile-cement products: "As for Canada's second argument, relating to 'quantification' of the risk, we consider that, as with the SPS Agreement, there is no requirement under Article XX(b) of the GATT 1994 to quantify, as such, the risk to human life or health.(750) A risk may be evaluated either in quantitative or qualitative terms. In this case, contrary to what is suggested by Canada, the Panel assessed the nature and the character of the risk posed by chrysotile-cement products. The Panel found, on the basis of the scientific evidence, that 'no minimum threshold of level of exposure or duration of exposure has been identified with regard to the risk of pathologies associated with chrysotile, except for asbestosis.' The pathologies which the Panel identified as being associated with chrysotile are of a very serious nature, namely lung cancer and mesothelioma, which is also a form of cancer. Therefore, we do not agree with Canada that the Panel merely relied on the French authorities' 'hypotheses' of the risk."(751) 546. The Appellate Body also rejected Canada's argument that the Panel erroneously postulated that the level of health protection inherent in the measure was a halt to the spread of asbestos-related health risks, because it did not take into consideration the risk associated with the use of substitute products without a framework for controlled use. The Appellate Body stated: "[W]e note that it is undisputed that WTO Members have the right to determine the level of protection of health that they consider appropriate in a given situation. France has determined, and the Panel accepted, that the chosen level of health protection by France is a 'halt' to the spread of asbestos-related health risks. By prohibiting all forms of amphibole asbestos, and by severely restricting the use of chrysotile asbestos, the measure at issue is clearly designed and apt to achieve that level of health protection. Our conclusion is not altered by the fact that PCG fibres might pose a risk to health. The scientific evidence before the Panel indicated that the risk posed by the PCG fibres is, in any case, less than the risk posed by chrysotile asbestos fibres, although that evidence did not indicate that the risk posed by PCG fibres is non-existent. Accordingly, it seems to us perfectly legitimate for a Member to seek to halt the spread of a highly risky product while allowing the use of a less risky product in its place."(752) (iii) "Reasonably available" alternatives 547. In EC - Asbestos, the Appellate Body confirmed that a measure is "necessary" within the meaning of GATT Article XX(b) "if an alternative measure which [a Member] could reasonably be expected to employ and which is not inconsistent with other GATT provisions is [not] available to it." The Appellate Body in EC - Asbestos then considered Canada's claim that the Panel had erroneously found that "controlled use" was not a reasonably available alternative to the measure at issue. In this connection, Canada argued that the Appellate Body itself had held in US - Gasoline that an alternative measure can only be ruled out if it is shown to be impossible to implement. The Appellate Body rejected Canada's argument, but began its analysis by acknowledging that "administrative difficulties" did not render a measure not "reasonably available": "We certainly agree with Canada that an alternative measure which is impossible to implement is not 'reasonably available'. But we do not agree with Canada's reading of either the panel report or our report in United States - Gasoline. In United States - Gasoline, the panel held, in essence, that an alternative measure did not cease to be 'reasonably' available simply because the alternative measure involved administrative difficulties for a Member.(753) The panel's findings on this point were not appealed, and, thus, we did not address this issue in that case." 548. The Appellate Body then found that "several factors must be taken into account" in ascertaining whether a suggested alternative measure is "reasonably available". In this context, the Appellate Body mentioned, inter alia, the importance of the value pursued by the measure at issue: "Looking at this issue now, we believe that, in determining whether a suggested alternative measure is 'reasonably available', several factors must be taken into account, besides the difficulty of implementation. In Thailand - Restrictions on Importation of and Internal Taxes on Cigarettes, the panel made the following observations on the applicable standard for evaluating whether a measure is 'necessary' under Article XX(b):
'The import restrictions imposed by Thailand could be considered to be 'necessary' in terms of Article XX(b) only if there were no alternative measure consistent with the General Agreement, or less inconsistent with it, which Thailand could reasonably be expected to employ to achieve its health policy objectives.'(754) (emphasis added)
In our Report in Korea - Beef, we addressed the issue of 'necessity' under Article XX(d) of the GATT 1994.(755) In that appeal, we found that the panel was correct in following the standard set forth by the panel in United States - Section 337 of the Tariff Act of 1930:
'It was clear to the Panel that a contracting party cannot justify a measure inconsistent with another GATT provision as 'necessary' in terms of Article XX(d) if an alternative measure which it could reasonably be expected to employ and which is not inconsistent with other GATT provisions is available to it. By the same token, in cases where a measure consistent with other GATT provisions is not reasonably available, a contracting party is bound to use, among the measures reasonably available to it, that which entails the least degree of inconsistency with other GATT provisions.'(756)
We indicated in Korea - Beef that one aspect of the 'weighing and balancing process ... comprehended in the determination of whether a WTO-consistent alternative measure' is reasonably available is the extent to which the alternative measure 'contributes to the realization of the end pursued'.(757) In addition, we observed, in that case, that '[t]he more vital or important [the] common interests or values' pursued, the easier it would be to accept as 'necessary' measures designed to achieve those ends.(758) In this case, the objective pursued by the measure is the preservation of human life and health through the elimination, or reduction, of the well-known, and life-threatening, health risks posed by asbestos fibres. The value pursued is both vital and important in the highest degree."(759) 549. The Appellate Body then examined the remaining question of "whether there is an alternative measure that would achieve the same end and that is less restrictive of trade than a prohibition,"(760) i.e. "whether France could reasonably be expected to employ 'controlled use' practices to achieve its chosen level of health protection - a halt in the spread of asbestos-related health risks":(761) "In our view, France could not reasonably be expected to employ any alternative measure if that measure would involve a continuation of the very risk that the Decree seeks to 'halt'. Such an alternative measure would, in effect, prevent France from achieving its chosen level of health protection. On the basis of the scientific evidence before it, the Panel found that, in general, the efficacy of 'controlled use' remains to be demonstrated. Moreover, even in cases where 'controlled use' practices are applied 'with greater certainty', the scientific evidence suggests that the level of exposure can, in some circumstances, still be high enough for there to be a 'significant residual risk of developing asbestos-related diseases.' The Panel found too that the efficacy of 'controlled use' is particularly doubtful for the building industry and for DIY enthusiasts, which are the most important users of cement-based products containing chrysotile asbestos.(762) Given these factual findings by the Panel, we believe that 'controlled use' would not allow France to achieve its chosen level of health protection by halting the spread of asbestos-related health risks. 'Controlled use' would, thus, not be an alternative measure that would achieve the end sought by France."(763) (c) Reference to GATT practice 550. With respect to GATT practice under Article XX(b), see GATT Analytical Index, pages 565-573. 551. In Korea - Various Measures on Beef, the Appellate Body examined Korea's argument that the prohibition of retail sales of both domestic and imported beef products (the dual retail system) was designed to secure compliance with a consumer protection law, and thus, although in violation of Article III:4, nevertheless justified by Article XX(d). Referring to its Report on US - Gasoline, the Appellate Body set forth the following two elements for paragraph (d): "For a measure, otherwise inconsistent with GATT 1994, to be justified provisionally under paragraph (d) of Article XX, two elements must be shown. First, the measure must be one designed to 'secure compliance' with laws or regulations that are not themselves inconsistent with some provision of the GATT 1994. Second, the measure must be 'necessary' to secure such compliance. A Member who invokes Article XX(d) as a justification has the burden of demonstrating that these two requirements are met."(764) 552. In Korea - Various Measures on Beef, the Appellate Body attempted to situate the meaning of the term "necessary" within the context of Article XX(d) on a "continuum" stretching from "in |
