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WTO rules and environmental policies: GATT exceptions

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Note: This webpage is prepared by the Secretariat under its own responsibility and is intended only to provide a general explanation of the subject matter it addresses. It is in no way intended to provide legal guidance with respect to, or an authoritative legal interpretation of, the provisions of any WTO agreement. Moreover, nothing in this note affects, nor is intended to affect, WTO members' rights and obligations in any way.

> For a more in-depth discussion of environment-related disputes, see Environment-Related Disputes.

> Secretariat background note on how GATT Article XX is applied in WTO dispute settlement rulings.

> WTO Analytical Index on GATT Article XX

> WTO Analytical Index on GATS Article XIV


GATT Article XX on General Exceptions lays out a number of specific instances in which WTO members may be exempted from GATT rules. Two exceptions are of particular relevance to the protection of the environment: paragraphs (b) and (g) of Article XX. Pursuant to these two paragraphs, WTO members may adopt policy measures that are inconsistent with GATT disciplines, but necessary to protect human, animal or plant life or health (paragraph (b)), or relating to the conservation of exhaustible natural resources (paragraph (g)).

GATT Article XX on General Exceptions consists of two cumulative requirements. For a GATT-inconsistent environmental measure to be justified under Article XX, a member must perform a two-tier analysis proving:

  • first, that its measure falls under at least one of the exceptions (e.g. paragraphs (b) to (g), two of the ten exceptions under Article XX) and, then,

  • that the measure satisfies the requirements of the introductory paragraph (the “chapeau” of Article XX), i.e. that it is not applied in a manner which would constitute “a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail”, and is not “a disguised restriction on international trade”.
     


Environmental policies covered by Article XX

WTO members' autonomy to determine their own environmental objectives has been reaffirmed on a number of occasions (e.g. in US — Gasoline, Brazil — Retreaded Tyres). The Appellate Body also noted, in the US — Shrimp case, that conditioning market access on whether exporting members comply with a policy unilaterally prescribed by the importing member was a common aspect of measures falling within the scope of one or other of the exceptions of Article XX.

In past cases, a number of policies have been found to fall within the realm of these two exceptions:

  • policies aimed at reducing the consumption of cigarettes, protecting dolphins, reducing risks to human health posed by asbestos, reducing risks to human, animal and plant life and health arising from the accumulation of waste tyres (under Article XX(b)); and

  • policies aimed at the conservation of tuna, salmon, herring, dolphins, turtles, clean air (under Article XX(g)).

Interestingly, the phrase “exhaustible natural resources” under Article XX(g) has been interpreted broadly to include not only “mineral” or “non-living” resources but also living species which may be susceptible to depletion, such as sea turtles. To support this interpretation, the Appellate Body noted, in the US — Shrimp case, that modern international conventions and declarations made frequent references to natural resources as embracing both living and non-living resources. Moreover, in order to demonstrate the exhaustible character of sea turtles, the Appellate Body noted that sea turtles were included in Appendix 1 on species threatened with extinction of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (“CITES”).

Also in the US — Shrimp case, the Appellate Body accepted as a policy covered by Article XX(g) one that applied not only to turtles within the United States waters but also to those living beyond its national boundaries. The Appellate Body found that there was a sufficient nexus between the migratory and endangered marine populations involved and the United States for purposes of Article XX(g).


Degree of connection between the means and the environmental policy objective

In order for a trade-related environmental measure to be eligible for an exception under Article XX, paragraphs (b) and (g), a member has to establish a connection between its stated environmental policy goal and the measure at issue. The measure needs to be either:

  • necessary for the protection of human, animal or plant life or health (paragraph (b)) or

  • relating to the conservation of exhaustible natural resources (paragraph (g)).

To determine whether a measure is “necessary” to protect human, animal or plant life or health under Article XX(b), a process of weighing and balancing a series of factors has been used by the Appellate Body, including the contribution made by the environmental measure to the policy objective, the importance of the common interests or values protected by the measure and the impact of the measure on international trade. If this analysis yields a preliminary conclusion that the measure is necessary, this result must be confirmed by comparing the measure with its possible alternatives, which may be less trade restrictive while providing an equivalent contribution to the achievement of the objective pursued.

In the Brazil — Retreaded Tyres case, for instance, the Appellate Body found that the import ban on retreaded tyres was “apt to produce a material contribution to the achievement of its objective”, i.e. the reduction in waste tyre volumes. The Appellate Body also found that the proposed alternatives, which were mostly remedial in nature (i.e. waste management and disposal), were not real alternatives to the import ban, which could prevent the accumulation of tyres.

The Appellate Body also recognized in Brazil — Retreaded Tyres that certain complex environmental problems may be tackled only with a comprehensive policy comprising a multiplicity of interacting measures. The Appellate Body pointed out that the results obtained from certain actions — for instance, measures adopted in order to address global warming and climate change — can only be evaluated with the benefit of time.

In EC — Asbestos, the Appellate Body also found, as a result of a process of weighing and balancing a series of factors, that there was no reasonably available alternative to a trade prohibition. This was clearly designed to achieve the level of health protection chosen by France and the value pursued by the measure was found to be “both vital and important in the highest degree”. The Appellate Body made the point that the more vital or important the common interests or values pursued, the easier it was to accept as necessary measures designed to achieve those ends.

For a measure to be “relating” to the conservation of natural resources, a substantial relationship between the measure and the conservation of exhaustible natural resources needs to be established. In the words of the Appellate Body, a member has to establish that the means (i.e. the chosen measure) are “reasonably related” to the ends (i.e. the stated policy goal of conservation of exhaustible natural resources). Moreover, in order to be justified under Article XX(g), a measure affecting imports must be applied “in conjunction with restrictions on domestic production or consumption” (the even-handedness requirement).

In the US — Gasoline case, the United States had adopted a measure regulating the composition and emission effects of gasoline in order to reduce air pollution in the United States. The Appellate Body found that the chosen measure was “primarily aimed at” the policy goal of conservation of clean air in the United States and thus fell within the scope of paragraph (g) of Article XX. As far as the second requirement of paragraph (g) is concerned, the Appellate Body ruled that the measure met the “even-handedness” requirement, as it affected both imported and domestic products.

In the US — Shrimp case, the Appellate Body considered that the general structure and design of the measure in question were “fairly narrowly focused” and that it was not a blanket prohibition of the importation of shrimp imposed without regard to the consequences to sea turtles; thus, the Appellate Body concluded that the regulation in question was a measure “relating to” the conservation of an exhaustible natural resource within the meaning of Article XX(g). The Appellate Body also found that the measure in question had been made effective in conjunction with the restrictions on domestic harvesting of shrimp, as required by Article XX(g).
 

The importance of the manner in which trade-related environmental measures are applied

The introductory clause of Article XX (its chapeau) emphasizes the manner in which the measure in question is applied. Specifically, the application of the measure must not constitute a “means of arbitrary or unjustifiable discrimination” or a “disguised restriction on international trade”.

The chapeau requires that the measure does not constitute an abuse or misuse of the provisional justification made available under one of the paragraphs of Article XX, that is to say, is applied in good faith. In Brazil — Retreaded Tyres, the Appellate Body recalled that the chapeau serves to ensure that members' right to avail themselves of exceptions is exercised in good faith in order to protect legitimate interests, not as a means to circumvent one member's obligations towards other WTO members. In other words, Article XX embodies the recognition by WTO members of the need to maintain a balance between the right of a member to invoke an exception and the rights of the other members under the GATT.

WTO jurisprudence has highlighted some of the circumstances which may help to demonstrate that the measure is applied in accordance with the chapeau. These include relevant coordination and cooperation activities undertaken by the defendant at the international level in the trade and environment area, the design of the measure, its flexibility to take into account different situations in different countries as well as an analysis of the rationale put forward to explain the existence of a discrimination (the rationale for the discrimination needs to have some connection to the stated objective of the measure at issue).

The role of international coordination and cooperation

In the US — Gasoline decision, the Appellate Body considered that the United States had not sufficiently explored the possibility of entering into cooperative arrangements with affected countries in order to mitigate the administrative problems raised by the United States in their justification of the discriminatory treatment.

Moreover, in the US — Shrimp case, the fact that the United States had “treated WTO members differently” by adopting a cooperative approach regarding the protection of sea turtles with some members but not with others also showed that the measure was applied in a manner that discriminated among WTO members in an unjustifiable manner.

At the compliance stage, in US — Shrimp (Article 21.5), the Appellate Body found that, in view of the serious, good faith efforts made by the United States to negotiate an international agreement on the protection of sea turtles, including with the complainant, the measure was now applied in a manner that no longer constitutes a means of unjustifiable or arbitrary discrimination.

The Appellate Body also acknowledged that, “'as far as possible', a multilateral approach is strongly preferred” over a unilateral approach. But, it added that, although the conclusion of multilateral agreements was preferable, it was not a prerequisite to benefit from the justifications in Article XX to enforce a national environmental measure.

The flexibility of the measure to take into account different situations in different countries

In the US — Shrimp case, the Appellate Body was of the view that rigidity and inflexibility in the application of the measure (e.g. by overlooking the conditions in other countries) constituted unjustifiable discrimination. It was deemed not acceptable that a member would require another member to adopt essentially the same regulatory programme without taking into consideration that conditions in other members could be different and that the policy solutions might be ill-adapted to their particular conditions.

In order to implement the panel and Appellate Body recommendations, the United States revised its measure and conditioned market access on the adoption of a programme comparable in effectiveness (and not essentially the same) to that of the United States. For the Appellate Body, in US — Shrimp (Article 21.5), this allowed for sufficient flexibility in the application of the measure so as to avoid “arbitrary or unjustifiable discrimination”.
 

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The text of GATT Article XX

“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 [the GATT] shall be construed to prevent the adoption or enforcement by any contracting party of measures: ...

(b) necessary to protect human, animal or plant life or health;...

(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption. ...”
 

(Article XIV of the GATS contains the same introductory clause and the same paragraph (b) — but it does not contain an equivalent to paragraph (g))



























































































 

 

 

The design of the measure

Finally, an environmental measure may not constitute a “disguised restriction on international trade”, i.e. may not result in protectionism. In past cases, it was found that the protective application of a measure could most often be discerned from its “design, architecture and revealing structure”. For instance, in US — Shrimp (Article 21.5), the fact that the revised measure allowed exporting countries to apply programmes not based on the mandatory use of TEDs, and offered technical assistance to develop the use of TEDs in third countries, showed that the measure was not applied so as to constitute a disguised restriction on international trade.

Introduction
Key GATT disciplines
Other relevant WTO texts
Environment-related disputes

TEDs?

A TED (turtle excluder device) is a trapdoor installed inside a trawling net which allows shrimp to pass to the back of the net while directing sea turtles and other unintentionally caught large objects out of the net.