Adjudication in the GATT/WTO: Making General Exceptions in Trade Law
Adjudication in the GATT/WTO: Making General Exceptions in Trade Law
Abstract and Keywords
This chapter introduces international judicial institutions as weighty actors in international legal discourse. It shows how the practice of adjudication in international trade law has shaped the general exceptions of Art. XX GATT. The spell of precedents has not only carried semantic shifts but it has also provided new reference points for legal discourse to which interpreters are expected and forced to relate their arguments. In substance, adjudicators have shaped the law to provide thick standards for domestic regulatory processes. They walk the line between proportionality analysis at the international level and deference to domestic regulatory autonomy. The chapter closes by sketching how interpretation may be guided by considerations of democratic legitimacy in a system of multilevel governance.
Keywords: General Agreement on Tariffs and Trade, GATT, World Trade Organization, WTO, judicial lawmaking, adjudication, precedents, proportionality analysis, trade and public policy, general exceptions of Art. XX GATT
In cases of uncertainty about what a norm means, courts promise clarification. Parties to the proceedings fight about the meaning of norms and seek to find acceptance for their interpretations—authoritative recognition for claims about (il)legality, that is. Before court, each side to a dispute invokes the law for its position and adjudicators then decide what the law really means. In international law, for a long time there were few avenues that would lead to international adjudication—few international courts, little adjudicatory practice, and almost no compulsory jurisdiction. That has changed, at least in some fields of international law. The creation of new and the increasing use of existing international courts has been one of the most significant developments in the international legal order of the past two decades.1
New judicial institutions have been created and others expanded. In 1992 the Security Council set up the ICTY and in 1994 the ICTR, in 1994 also the United Nations Convention on the Law of the Sea (UNCLOS) entered into force and paved the way for the International Tribunal for the Law of the Sea (ITLOS) to take off, in 1995 the Marrakesh Agreement created the WTO and with it established compulsory adjudication in international trade law, in 1998 the European Commission of Human Rights was abolished and all cases come directly before the ECtHR, and in 2002 the Rome Statute set up the ICC which lately put its power to the test with the arrest warrants for Sudanese President Umar al-Bashir as well as former Libyan leader Muammar Ghadaffi and his son Saif al Islam. The Project on International Courts and Tribunals now lists a total of 125 institutions with competences to decide legal questions in a judicial manner. Some of the creatures assembled in this compilation may indeed have little impact and may even suffer a dismal and peripheral existence at the margins of the international legal order. And (p.136) yet, empirical analysis suggests that international courts do play an increasingly significant role and should probably move closer to the centre of attention.2
The quantitative development has gone hand in hand with a shift in quality. By and large, international courts have surpassed their traditional role of successfully settling disputes in concrete cases. Instead they frequently direct their clout at expanding the reach of the international law by way of judicial practice. As Yuval Shany observed, many international courts are ‘no longer a weak department of power’.3 They do not simply find the law that is out there and aim at the successful resolution of individual disputes. They also deliberately aim at influencing the development of international norms by way of their interpretative practice. Even if such intent were absent, the effect would still persist. Judicial lawmaking is an inevitable byproduct in the practice of interpretation by institutions with a certain degree of semantic authority. As such, it ranges across the spectrum of old and new judicial institutions.4
In the WTO specifically, judicial lawmaking has attracted considerable attention. Whatever its normative appraisal, adjudicatory practice has as a matter of fact developed some of trade law’s cardinal norms and principles. It has generated new legal normativity, structured the space in which actors craft their interpretations, and, in short, it has changed the law. John Jackson, one of the leading scholars in the field, opines that
[t]here are some important lessons in the GATT/WTO story…Perhaps the most significant lesson is that human institutions inevitably evolve and change, and concepts which ignore that, such as concepts which try to cling to ‘original intent of draftspersons,’ or some inclination to disparage or deny the validity of some of these evolutions and changes, could be damaging to the broader purposes of the institutions.5
There are numerous examples of how norms develop and change their meaning in international trade law. One might for instance think of Art. XXIII GATT (p.137) stipulating that a member may file a complaint if it ‘consider[s] that any benefit accruing to it directly or indirectly under this Agreement is being nullified or impaired’. This used to mean that it is neither sufficient nor necessary to find a breach of obligation. Jurisprudence would hold that any harm in trade would qualify that ‘could not reasonably have been anticipated’ at the time when concessions were negotiated. The test was one akin to something like ‘legitimate expectations’, known from contract law.6 In a landslide shift in the early 60s, a panel then established that a violation of the GATT would be considered a ‘prima facie nullification or impairment’ in the sense of Art. XXIII.7 In practice, this interpretation grew to build up the almost irrefutable presumption that any violation would also be a nullification or impairment. The GATT panel in Oil Fee later cemented this interpretation by reasoning that a finding of nullification or impairment derives practically ipso facto from a violation of the GATT. As Jackson observes, the meaning of Art. XXIII was thus ‘brought almost full circle by the evolutionary case-by-case process’ of adjudication.8
The development of norms through adjudicatory practice is certainly not confined to the context of the WTO.9 The ICTY and ICTR have shaped the meaning of many elements of international criminal law by way of their practice.10 A system of bilateral investment treaties stands under the spell of precedents set by arbitration tribunals,11 and whoever wishes to find out what the ECHR means will need to look at the ECtHR’s jurisprudence (or at a commentary that does the work (p.138) instead).12 Other regional human rights courts have been just as active.13 As part of sectoral regimes, international courts tend to project their particular perspective onto the law—maybe even with a missionary fervour.14 Some judicial institutions have even been created precisely for the purpose of lawmaking. The International Centre for the Settlement of Investment Disputes (ICSID), for example, by and large goes back to the initiative of the then General Counsel of the World Bank Aron Broches who, in the face of failed multilateral negotiations about the applicable substantive law, advanced the programmatic formula ‘procedure before substance’. The substance would, he maintained, follow quite naturally in the practice of adjudication.15 And so it did, deeply imbued in the functionally tailored perspective of the investment protection regime.16
This chapter focuses on the agency of GATT/WTO adjudicators in developing the provisions on general exceptions in Art. XX GATT. The practice of adjudication has not only contributed to semantic changes of the provisions. But judicial precedents have also generated new reference points in legal argument and the authority of precedents has generated new legal normativity. The chapter first introduces international courts as actors in international legal discourse and suggests that they have come to wield increasing power in the development of international norms. In particular, judicial precedents weigh strongly in semantic disputes about what international norms mean. The GATT/WTO context portrays a number of particular features with regard to lawmaking by adjudicators’ interpretative practice (A.).
The next two sections analyse concrete developments in the general exceptions of international trade law and point to changes in the institutional context that have nurtured the authority of adjudicators. In the era of the GATT, case-law set up a standard that made it very difficult to justify a policy on the basis of general exceptions. Faced with increasing challenges of policies aiming at the pursuit of (p.139) non-trade objectives, adjudicators raised another barrier in a tone of existentialist angst: measures aimed at subject matters outside the member state’s jurisdiction were on the whole hardly justifiable (B.).
A lot has changed since the dawn of the WTO. While the new Appellate Body engaged at length with the precedents set by previous panels, it first tore down the so-called ‘territorial limitation’, lowered the threshold slightly but significantly, and then built up a rich body of jurisprudence with regard to general exceptions that introduces requirements of balancing into the legal analysis. What the new standard means remains thoroughly contested. Little doubt remains, however, that the Appellate Body has in effect come to reign over the intersection between trade objectives and other public policy concerns in the WTO (C.).
The conclusion emphasizes the powerful spell of precedents in international trade law and dwells on the observation that the practice of legal interpretation centred on Art. XX has actually turned into a discourse about what adjudicators can legitimately do in a system of multi-level governance (D.).
A. International adjudicators as actors in legal discourse
Over the past two decades, a number of international courts have entered the stage of international legal discourse with new qualities.17 A shift in ethos has to some extent accompanied their increase in number and in business. While they once primarily formulated their self-understanding in light of the primary objective of ensuring peace by way of successful inter-party dispute settlement, they now lean towards the deliberate development of international law by way of interpretation.18 Neither international courts nor their agency in lawmaking are entirely new phenomena. Hopes for a lasting international peace have long been vested in an international judiciary that should actively engage in the development of international law. ‘More growth of international law through international decisions!’ was Hans Wehberg’s illustrative slogan that encapsulates much of the spirit of the interwar period.19 The project of international peace has traditionally informed the understanding of international courts’ functions (1.). New international courts have in large part superseded their traditional role of effectively settling disputes in the service of international peace to engage in judicial lawmaking—with deliberate intention, or as a matter of inevitable fact. In the practice of interpretation courts take an outstanding position. They usually have an extraordinary impact on the development of the law due to the working of precedents (2.). The rise of the (p.140) adjudicatory bodies within the GATT/WTO context provides a fitting example while it portrays a number of specific features (3.).
1. Historiography: Longing for international adjudication
The creation of a strong international judiciary was a central demand of various peace movements throughout the nineteenth century.20 Also many progressive international lawyers pushed this goal. The Institut de Droit International, founded in Ghent in 1873, invested its efforts in promoting the development of international arbitration ever since its early beginnings and formulated draft procedures for international arbitration.21 The International Law Association, founded in the same year, dedicated itself to the same project. At its very first meeting, it adopted a resolution confirming its conviction that arbitration is ‘le moyen essentiellement juste, raisonnable, et même obligatoire, pour les nations, de terminer les différends internationaux’.22 Similarly, the Interparliamentary Union, created in 1889, was committed to working towards the peaceful settlement of disputes and put together a ‘Draft for the Organization of a Permanent Court of Arbitration’ that would actually come to serve as a reference point in discussions at the First Hague Peace Conference of 1899.23 In short, the development of the international judiciary at the beginning of the twentieth century is hard to imagine without the impulses of the peace movement and the political commitment of prominent international lawyers.
However, it was Tsar Nicholas II of Russia who, in 1898, surprised everyone with his invitation to an international conference that would pursue the goal of giving effect to the grand idea of world peace and making it triumph over all elements of strife and mischief.24 At first the focus of the conference was supposed to lie on issues of disarmament. But as the conference drew nearer, the emphasis shifted towards international adjudication. The aim of disarmament, the argument went, could only be met if states did not resort to war when conflicts between them escalated but rather turned to judicial dispute settlement. Laying down the foundations for such a path towards the peaceful resolution of disputes then became the (p.141) central task of the 1899 Peace Conference in The Hague. In spite of its sobering results, the conference entered the historiography of international adjudication as a milestone on the way towards a permanent international court.25
In the wake of the First Peace Conference, the project of international adjudication found considerable support within the US administration. Theodore Roosevelt and both of his ministers of state, John Hay and Elihu Root, were ardent supporters of judicial dispute settlement at the international level. Roosevelt also took the initiative that led to the Second Hague Peace Conference of 1907, even if he left the formal invitation to Tsar Nicholas II. In a few aspects the second conference surpassed the results of 1899, but it could not achieve the creation of a truly permanent international court. One of the main points of controversy related to the independence of the court and the election of its judges. European great powers argued that international dispute settlement is in essence part of the political domain and naturally unsuited for judicial resolution. They maintained that a strong political influence should also be felt in the judicial process.26 In this vein, Friedrich von Martens, the chief Russian delegate to both Peace Conferences and arbitrator in very high demand in his time, argued that international arbitration was merely concerned with successfully disposing of a dispute. He was of the opinion that judicial reasoning is only of subordinate importance for this purpose.27 On the contrary, Elihu Root placed his hopes on the logic of the law and relied on the pacifying tongue of legal argument. He drew a close analogy to the US Supreme Court and argued that only independent judges and their impartial resolution of conflicts could gain the confidence of the parties: ‘What we need for the further development of arbitration is the substitution of judicial action for diplomatic action, the substitution of judicial sense of responsibility for diplomatic sense of responsibility.’28
Even though the project of a permanent court had suffered repeated setbacks, many international lawyers felt vindicated by the Hague Peace Conferences in their quest for international dispute resolution and continued to pursue this project with renewed vigour.29 In Germany, for example, Hans Wehberg crafted a remarkable critique of case-specific arbitration that, in his view, was attached too closely to the logic of politics. It is indispensable, he maintained, that a permanent international (p.142) court be set up in order to prevent states from invoking violations of their legal rights as pretexts for war. Wehberg continued to argue that arbitral awards are wholly unsuited to achieve this effect because they cannot build on, nor contribute to, the clarity of the generally applicable law. Arbitration also typically fell short of standards of legal reasoning that were absolutely necessary for international adjudication to fulfil its promise. For Wehberg, the way towards world peace inevitably led via a permanent international court. When he enthusiastically demanded ‘more development of international law by international decisions’,30 he offered a characteristic legitimatory narrative of international courts: international courts are the handmaidens of peace.
Aspirations to a permanent international court were finally met after the First World War when the Permanent International Court of Justice (PCIJ) was erected in 1920 within the new institutional framework of the League of Nations.31 Many scholars and commentators cheerfully praised this as an epochal event.32 James Brown Scott illustratively expressed his relief in the American Journal of International Law: ‘We should…fall upon our knees and thank God that the hope of ages is in process of realization.’33 Also Nicolas Politis welcomed the new court as ‘l’avènement d’une ère nouvelle dans la civilisation mondiale’.34
A number of international lawyers on both sides of the Atlantic projected their hopes onto the young PCIJ and complemented its work with doctrinal, theoretical, and philosophical works. Manley O Hudson succeeded in developing a remarkable plan for an international order of peace that focused on a strong international judiciary. His monograph Progress in International Organization (1932) theoretically backed up and conceptually framed his programmatic article The Permanent Court of International Justice—An Indispensable First Step (1923).35
After some first and shy steps, the court seemed as if it might actually live up to high expectations. Hersch Lauterpacht could already look back on a rich body of case-law in his The Development of International Law by the Permanent Court of International Justice of 1934 and highlighted the lawmaking side of the court’s judicial practice. Like Hudson, Lauterpacht maintained that judge-made law was an inevitable feature of every legally constituted community. There is no exception on the international level in this regard.36 Unlike Hudson, however, he did not see (p.143) the project of a strong international judiciary as part of a bigger package that would eventually also include a centralized international legislative body or even a kind of world government. It merits emphasis that Hudson and others pictured the centralization of the judiciary as a first step towards an international political order with a centralized legislative organ.37 This latter approach was particularly dominant in Germany where Immanuel Kant’s Perpetual Peace was dusted off and served as a theoretical foundation for blueprints of international order.38
A little later, it was Hans Kelsen who advanced the Kantian peace project with all his astonishing acuity. Kelsen saw no alternative to ensuring international peace by way of international law and universal compulsory international adjudication.39 In his account, the continuous centralization of state powers and the institutional separation of legislation and law-application are part of the natural evolution of law. It is simply the tide of things, Kelsen observed, that law-application is centralized first and that the legislature lags behind.40 In order to gain lasting international peace, states would have to obligatorily subject their differences to the compulsory jurisdiction of a permanent international court.41 Kelsen developed this argument looking back at the ignominious demise of the League of Nations, boldly facing the Second World War, and looking ahead to the design of the post-war order. It had been the critical error in the construction of the League, he argued, that the Council and not the Permanent Court was the most powerful organ. Every decision in the Council had to be taken with unanimity and no member could thus be bound against its will. Only decision-making processes in international courts were not shackled by the principle of unanimity and the road to an international order in the service of peace therefore had to go via universal compulsory adjudication.42 The lack of a functional legislature does not weigh against this path because the natural evolution of the law proceeds without a centralized legislative body—the law is a product of agreement and habits, themselves usually products of judicial practice.43 As soon as a central and (p.144) universally competent international judiciary exists, it continuously develops the law in constant legal practice and adapts it to prevailing needs.44
A historiography of the international judiciary shows that the conception of international courts as actors in the development of the law has been a rather common theme in international legal thinking. José Alvarez observes that ‘the notion that international judges are charged only with applying pre-existing law seems laughable’.45 And yet, remnants of the bygone thought that any court’s role lies in nothing other than the recognition of the law still overshadow courts agency to some extent.46 The theoretical perspective on the practice of interpretation set out above endeavours to contrast this thinking with a focus on the politics of interpretation. Extending this perspective onto courts as actors in international legal discourse merits a special note of vindication.
2. Judicial decisions and precedents
No actor other than courts has succeeded to such a large degree in portraying its interpretations to stand unsoiled and above the dirty business of politics. Even if the metaphor describing judges as the ‘bouche de la loi’ no longer—if ever—directs the thought on what they actually do, the understanding is still ubiquitous that judges find the right decision in the individual case by looking at the relevant norms in the context of the legal system.47 Max Weber, himself a lawyer and close companion of Georg Jellinek, one of the key figures in continental legal thinking, wrote that case-law shows what is valid law in a way that follows compelling logical deduction or that is bound by conventional schemata of judicial thinking.48 Most certainly, few courts would contradict this view on their practice but might rather be inclined to do everything to sustain it. What is more, this understanding forms an intricate part of a prevailing and self-reinforcing judicial ethos: judges apply the law, the law is the source of their authority, and whenever the perception grows that this is not what they are doing, they face critique. Also the rules of legal discourse might convey the premise that judges can and hopefully do find the law. The law is the reference (p.145) point for all contestants and the judges must justify their decision by reference to the existing law.49 In prototypical fashion, the ICJ stressed that ‘the Court, as a court of law, cannot render judgment sub specie legis ferendae, or anticipate the law before the legislator has laid it down’.50 On the later occasion of its Nuclear Weapons Advisory Opinion it reiterated that it ‘cannot legislate, and, in the circumstances of the present case, it is not called upon to do so. Rather its task is to engage in its normal judicial function of ascertaining the existence or otherwise of legal principles and rules applicable to the threat or use of nuclear weapons.’51 In short, the self-portrait of the judiciary as an institution for finding the right meaning of the law does inform the understanding of what it actually does.52
The persistence of this understanding is surprising, not only because of ages of realist critique, but also because ever since Kant’s Critique it has no longer been possible to claim that decisions in concrete situations can be deduced from abstract concepts.53 Since the end of the nineteenth century, legal theory has wrestled with the repercussions of this thought.54 It is Hans Kelsen’s neo-Kantian critique that stands out in formulating the consequences in this regard. The linguistic turn and the advancement of semantic pragmatism later further corroborate the point: there is no escaping interpretation and interpretations take part in the construction of meaning.55
The law-creative side of courts’ decisions has two closely intertwined dimensions. One centres on the particular case and on lawmaking in the dispute between the parties.56 This is reflected in the doctrine of res judicata, the law spoken in the individual case and binding only between the immediate parties.57 The other (p.146) dimension goes beyond the individual dispute.58 A judicial judgment, the decision as well as its justification, may amount to an important argument in subsequent legal practice.59 Courts that publish their decisions and justifications also engage in broader processes of legal discourse—both with the decision’s justification (ratio decidendi) as well as with everything said on the side (obiter dictum).60 Many judgments even appear to be candidly geared towards providing an authoritative reference point for future discourse by crafting general and abstract formulations.
To be sure, categorically marking the lawmaking momentum vested in the justification of legal decisions as an undue expansion of competences and as a usurpation of power by politicized courts would be plainly short-sighted. Judicial lawmaking is a quite inevitable part of adjudication and justifying a decision is even a legal requirement.61 The alternative, refraining from justifying decisions or from making them public, might possibly weaken the jurisgenerative dimension of adjudicatory practice. But it would be tantamount to a Pyrrhic victory. The larger legal discourse could then no longer function as a mechanism of control and critique. Also legal certainty would be sacrificed. The reasoning that carries legal decisions is part of judicial legitimation and very different legal theories share the understanding that the stabilization of normative expectations is a chief function of the law.62 An international court that neglects this function falls short of one of its central tasks. Judicial lawmaking then is not a sort of nuisance resulting from a dysfunction but quite to the contrary part of the normal business of courts.
International courts are particularly influential actors in the practice of interpretation because of the operation of their decisions as precedents. Precedents play a key role in how international courts develop the law and generate legal normativity. Of course doctrine strikes a different tone—it is a trite commonplace that international law knows no stare decisis rule, that judgments are binding only inter partes,63 and that Art. 38(1)(d) ICJ Statute mentions judicial decisions only as subsidiary (p.147) means of interpretation, as a Rechtserkenntnisquelle (source for recognizing the law) and not a Rechtsquelle (a source of law). Good reasons may speak in favour of this distinction in doctrine, but it does overshadow the actual workings of precedents. As a matter of fact, in many judgments precedents amount to influential arguments and actors in legal interpretation wrangle about the meaning of previous decisions just as they fight about the meaning of treaty texts. In most practical circumstances, interpreters cannot escape the discussion of case-law. Judicial decisions significantly redistribute argumentative burdens and courts are expected to decide consistently or, if they deviate from precious jurisprudence, to give reasons for why that is.64 It is another matter that international courts frequently do not live up to these expectations. There is both a force as a matter of fact as well as an attitude that interpretation should relate to relevant earlier decisions. The working of precedents underlies international courts’ remarkably strong semantic authority in international legal discourse.65
Courts have continuously and for a long time stressed the significance of precedents and have thus contributed to their authority. Already in the Mavrommatis case the PCIJ found that it had ‘no reason to depart from a construction which clearly flows from the previous judgments the reasoning of which it still regards as sound’.66 In his thorough analysis of the PCIJ, Ole Spiermann has shown that the court portrayed an increasing inclination to actively engage in the development of international law—the working of precedents was crucial in this endeavour.67 The semantic authority of international judicial institutions and international judicial lawmaking are thus certainly not new phenomenona, but they have lately gained increasing magnitude.
3. The GATT/WTO context
Adjudication displays a number of particular features in the context of the GATT/WTO. The institutional development of this context is a superb illustration of institutional growth (or mission creep) that connects to the preceding chapter on the agency of international organizations. Its story has been told many times: after the Second World War it was evident that economic recovery would only be possible with a novel expansion of international trade, the prospects of which (p.148) were hampered by outstandingly high tariffs and by a tight network of quantitative restrictions, or quotas. To overcome these trade barriers, governments, partly driven by the United States and the United Kingdom, negotiated the GATT—a multilateral trade agreement whose basic idea it was to centre all foreign trade policies on tariffs, to control all other forms of non-tariff barriers to trade, and to then successively lower tariffs in continuous negotiations that would lead to legally binding commitments on tariff rates for each country, drawn together in the schedules of concessions. The GATT was meant to form part of an International Trade Organization (ITO) that never came into existence and until 1995 the GATT of 1947 was applied provisionally.68
The GATT only contains vague dispute settlement procedures. By and large, Art. XXIII on nullification and impairment indicates that a member, whose benefits under the agreement might be impaired or nullified, consults with the member(s) in question and, should this not lead to satisfactory results, refers the matter to the contracting parties. The member whose benefits are found to be impaired or nullified may withdraw equivalent concessions. The mechanism thus rests on reciprocity. Its procedure resorts to consultation and hinges on negotiation—a long way from anything that resembles court-like proceedings. In Robert Hudec’s fitting words, ‘[i]t was a diplomat’s legal order. At least, that is the way it started out.’69 After all, the GATT was to be institutionally embedded within the ITO, only that the ITO never came about.
Over the years, the GATT developed features that made it look and work very much like any other international organization in spite of its defects at birth. The GATT secretariat took a crucial role in this development, in particular with regard to the dispute settlement mechanism. At its inception, the GATT was run and characterized by the same diplomats who had negotiated the GATT, they represented the parties, and also staffed the small secretariat. On their own initiative, they developed the now well-known panel procedure for dealing with disputes, which has since advanced to be one of trade law’s flagships. A legal dispute is referred to a panel of three or five independent panellists, usually GATT delegates from neutral countries selected by the parties or the secretariat. The panel deals with competing claims in written and oral submissions, deliberates in camera, usually receives advice from the GATT secretariat, and renders a report containing a justified legal decision on the matters under dispute. This report is itself without (p.149) binding force and may be adopted, or not, by the Council made up of all contracting parties.
There has been considerable development in each of these steps. Most importantly, consensus decisions were necessary at decisive points in the process, meaning that every member, including any disputing party, could block the process from moving on—a requirement that has gradually eroded.70 Most significantly, the process, once dominated by GATT diplomats and trade experts, has increasingly come under the influence of trained lawyers. With this shift in personnel, the characteristic reasoning also moved towards judicial technique.71 The creation of a legal division within the GATT secretariat in the early 1980s is of great importance in this regard and has had a lasting impact on the adjudicating bodies. Starting in the mid-1980s it would regularly draft panel reports, work towards consistency, and contribute to a legal mode of dispute settlement.72 Institutional growth in the GATT thus largely equalled a more professionally legal mode of working with disputes.73
With the Marrakesh Agreement setting up the WTO in 1995, the new appeal mechanism in adjudication would come with a most crucial shift in patterns of reasoning. Suffice it for now to point out that the Appellate Body (AB) has had an immense impact on the practice of interpretation in international trade law.74 Three aspects stand out. First, the Appellate Body as an institution as well as the work of its individual members has further buttressed the transformation of discourse within the GATT/WTO context towards a legal mode of argument. One of the principal manifestations is, second, how the new adjudicators have embraced the VCLT in their first decisions as the rules of the game. Third, the appellate mechanism has critically fostered the impact of precedents in the practice of interpretation. The weight the AB explicitly attaches to its previous reports almost makes a mockery out of suggestions that reports have no legal effects beyond the parties to the dispute. The systemic impact of adjudication upon trade law in general has thus come to be commonly recognized among relevant actors. In the discussion of one of the first AB reports in the Dispute Settlement Body, the minutes of the meeting record the words of the Brazilian representative:
(p.150) [i]t was well-known that in practice any decision of a panel or the Appellate Body with regard to a specific case would go beyond such a specific case. Although no binding precedents had been created, the findings and conclusions of panels and the Appellate Body adopted by the DSB had created expectations concerning future interpretations of the DSU and the WTO Agreement. Therefore, in light of these systemic implications of decisions and recommendations pertaining to a specific case, Brazil wished to state its position with regard to certain findings of the Appellate Body.75
In sum, over the course of institutional development within the GATT/WTO the body of jurisprudence has gained an increasing momentum. I shall now turn to the more detailed analysis of semantic change in Art. XX GATT. For this purpose, it is helpful to place general exceptions into their context within the GATT and to elaborate in little more detail what stirs up semantic disputes on this matter.
B. Article XX in the era of the GATT
1. General exceptions: A general prologue
Public policy considerations such as the protection of human, animal, or plant life have long served as the rationale and justification for trade restrictive policies.76 In 1906 state representatives met in Berne in order to prohibit the international trading of matches produced with and containing poisonous white phosphorus. Countries that had taken the lead in banning white phosphorus in their production processes pushed for a far-reaching import ban. Their industries had already moved to more costly alternative substances and now suffered a disadvantage in price competition.77 The mixture between trade objectives and other concerns like workers’ health protection is easy to see in this example: the ban on white phosphorus was pushed with reference to health concerns by those who also sought to level out competitive disadvantages.78 A treaty of 1911 on seal hunting serves as another case in point. It obliged its members to prohibit the importation of sealskins produced in violation of that treaty.79 There are numerous further examples of trade restrictions aimed at public concerns like health or environmental protection. Before the rise of free trade agreements, however, the trade implications of such policies did not usually give rise to knotty legal questions.
(p.151) The first significant attempt at a multilateral trade agreement was taken within the framework of the League of Nations in 1927. The International Convention for the Abolition of Import and Export Prohibitions and Restrictions aimed high, tried to abolish quantitative restrictions, and sought to reduce tariffs within six months.80 According to Art. 5, ‘vital interests’ should still be protected. The Convention never took off, not least due to the heavy burdens of the economic downturn of the late 1920s, which proffered protectionism as the nearby answer to boarding economic problems.81 Notably, the League’s Economic Committee observed that there had been a long-established international practice on public policy exceptions, which are regarded as indispensable and as not contravening the aims of free trade.82 The 1927 Convention made an important qualification in this regard and specified that exceptions should ‘not be applied in a manner as to constitute a means of arbitrary discrimination between foreign countries where the same conditions prevail, or a disguised restriction on international trade’ (Art. 4). This wording made its way through a number of negotiations into the 1947 General Agreement on Tariffs and Trade (GATT).83
Article XX GATT reads:
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;…
(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;…
(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption;….
This article on general exceptions stands in close relationship with other GATT provisions, above all those giving expression to the principle of non-discrimination. (p.152) The necessary basics are that Art. XX comes into play in practice as a justification of trade restrictions that would otherwise amount to a violation of the GATT. Measures that come under Art. XX normally aim at non-trade objectives and need justification because they conflict with the general prohibition of quantitative restrictions (Art. XI), with the prohibition of discrimination between like products whose imports are still restricted in quantitative terms (Art. XIII), or where the measures conflict with the obligation to provide national treatment with regard to internal taxation and regulation (Art. III).84 For Art. XX to become relevant there needs to be an inconsistency in the first place. While there is room for considering a policy’s aim already at this stage of the legal analysis (with the possible effect of finding that there is no violation),85 trade restrictive measures that aim at other public policy considerations are typically found to be in prima facie violation of the GATT and are accordingly addressed under Art. XX. Before turning to the analysis of developments in Art. XX, the interpretation of Art. III is key and a place of no less interesting semantic struggles.
Article III reads:
1. The contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products, and internal quantitative regulations requiring the mixture, processing or use of products in specified amounts or proportions, should not be applied to imported or domestic products so as to afford protection to domestic production.
2. The products of the territory of any contracting party imported into the territory of any other contracting party shall not be subject, directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products. Moreover, no contracting party shall otherwise apply internal taxes or other internal charges to imported or domestic products in a manner contrary to the principles set forth in paragraph 1.
4. The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. The provisions of this paragraph shall not prevent the application of differential internal transportation charges which are based exclusively on the economic operation of the means of transport and not on the nationality of the product.
[a] tax conforming to the requirements of the first sentence of paragraph 2 would be considered to be inconsistent with the provisions of the second sentence only in cases where competition was involved between, on the one hand, the taxed product and, on the other hand, a directly competitive or substitutable product which was not similarly taxed.
Determining whether a policy is in breach of Art. III inescapably runs into some complex and fundamental discussions of trade law, including the meaning of ‘like product’ and of ‘so as to afford protection’. Joseph Weiler pertinently observed that ‘the material and conceptual contours of the discipline of national treatment not only remain contested but are, par excellence, the creature of legal discourse’. He goes on to note that they are ‘the most telling examples of the law of the WTO as reflecting and constituting the deepest ontological issues of the system’.86
For the present context and with regard to the intersection of trade objectives with other public policy considerations, it is helpful to point out that a policy’s aim may be considered at three stages in the legal analysis.87 It may first come into play in the comparison of imported products with domestic products—in the determination of whether the products are like or whether they are directly competitive or substitutable products.88 A first thing to note is that the meaning of ‘like’ can plausibly differ within the GATT and also within Art. III itself.89 The interpretation of Art. III in the GATT era then shows that already in the comparison of the imported with the domestic products the ‘aim and effect’ of the policy under scrutiny could be considered.90 A difference in treatment between two products that share very similar characteristics as well as similar attributes on the market could not amount to discrimination in the sense of the national treatment rule because the difference in treatment did not aim to provide an advantage for domestic products. The Appellate Body later clearly rejected the view that intent may indicate whether products are like and common wisdom at present holds that (p.154) two products’ likeness is to be determined in the market place by the use of a number of indicators.91 Aim and effect no longer seem to matter in determining ‘likeness’. But there still appears to be much room for contesting this position. The best help for this comes from the Appellate Body itself; namely, from its report in EC—Asbestos where it reversed the panel’s interpretation that France’s import ban on asbestos and products containing asbestos violates the national treatment requirement of Art. III(4). It held that asbestos, and products containing asbestos, and the closest substitute, cellulose and glass fibres, are unlike products. It did so by placing emphasis on the ‘well-known, life-threatening, health risks posed by asbestos fibres’, thus silently suggesting that the bygone aim and effect test could render products unlike.92 But ultimately the Appellate Body tied the test of likeness again back to the market place, i.e. to consumers’ tastes and habits.93 Thus even if in the end the comparison of the two products’ market behaviour was decisive for determining likeness, the Appellate Body’s reasoning goes in the direction of contemplating a regulation’s objective in examining the relationship between two products.
At this point it is worth mentioning that it also remains questionable whether a differentiation can in principle only be based on physical characteristics of the product or if it can also extend to the product’s production and process method (PPM). This issue has drawn great attention ever since the Tuna—Dolphin I panel held ‘that Article III covers only measures affecting products as such’.94 According to this interpretation, only differences that leave their mark on a certain product may render it unlike another. Differences in the PPMs alone, e.g. in tuna fishing techniques would not suffice. This has been affirmed in Tuna—Dolphin II and in most cases thereafter, certainly not without heavy critique.95 In the WTO era, the Appellate Body has so far left the issue open. Some have advocated that integrating public policy considerations at this point of the legal analysis rather than another might be an elegant and preferable solution.96 The WTO secretariat also appears to (p.155) suggest that this might be a good way to go in its Report on Trade and Climate Change, a joint product with the UNEP secretariat. In its view, for example, border tax adjustments for otherwise identical products might not be considered discriminatory if they relate to the carbon emissions accumulated during production processes.97
This first stage in the legal analysis at which public policy considerations may come into play (in the determination of likeness) is closely intertwined with a second step in which a policy’s aim may be taken into account: the analysis of products’ treatment and whether they are treated differently ‘so as to afford protection’ as it is spelled out in Art. III(1). Controversies not only turn on this qualification’s meaning but also on its status for the interpretation of the other paragraphs—only ad Art. III(2) links the second paragraph’s second sentence directly to the first paragraph. It is most interesting to see that in Japan—Alcoholic Beverages II the US had in all matters of practical consequence won the case and yet appealed the panel decision because it did not agree with the panel’s reasoning on this issue.98 The appeal in this case may well be seen as yet another straightforward recognition of the fact that judicial decisions and their reasoning have repercussions beyond the individual case. The US criticized the panel’s isolated treatment of Art. III(2) and maintained that the first paragraph is an integral part of the context and must inform the reading of the second paragraph as well. Therefore, the US continued to argue, the panel erred in determining ‘likeness’ purely on the basis of physical characteristics and in not considering the policy under scrutiny (the Japanese tax scheme on alcoholic beverages). The US complained that the panel did not explore whether Japan really discriminated so as to afford protection.99
The argument developed by the US mingles the first and second steps. The question is clear nevertheless: does the intention behind the regulation matter in the analysis of legality under Art. III? The Appellate Body said that it does not, in a way. It starts out its examination of ‘so as to afford protection’ with the blunt statement that ‘[t]his is not an issue of intent’.100 And yet, it continues to argue that Art. III compels a ‘comprehensive and objective analysis of the structure and application of the measure in question on domestic as compared to imported products’ and that it is thus possible to ‘examine objectively the underlying criteria’ even though the ‘aim of a measure may not be easily ascertained’.101 This does seem to come close to an objective test to infer the regulator’s intention.102 A finding of dissimilar treatment of like products would then be a necessary but not sufficient (p.156) condition for discrimination. A determination of (il)legality would still hinge on whether it is applied ‘so as to afford protection to domestic products’.103
If the aim of a measure could not be brought into legal consideration either in the determination of the relationship between two products (their ‘likeness’ or that they are directly competitive and substitutable) or in the qualification of ‘so as to afford protection’, it might finally come into play in the third step: the analysis of a justification by way of general exceptions of Art. XX. This has come to be the place where competing aims, trade objectives, and other public policy considerations, are usually dealt with. Having placed Art. XX into its legal context, I will also briefly place it in its broader social context which explains why the interpretation of Art. XX has come to be an issue and why it had remained dormant for some time.
Potential conflicts between trade and other policy considerations have for some time slumbered beneath an agreed upon borderline separating normal trade policies from policies that struck everyone as unjustified and abnormal—an understanding that John Ruggie famously termed ‘embedded liberalism’.104 Trade liberalization would be embedded in the usual working of the interventionist welfare state and this context would provide the preconditions for GATT experts to follow a narrow focus on trade liberalization. At the end of the day, the argument went, everybody would be better off and issues of redistribution would be managed by the welfare state.105 Within the group of GATT trade experts, shared understandings of an embedded liberalism were transformed into an economic free trade ideology that became increasingly detached from the preconditions under which its arguments did actually work.106 With the political shift towards deregulatory economic policy at the end of the 1970s, spearheaded by Ronald Reagan and Margaret Thatcher, the consensus among the contracting parties over what was appropriate intervention in contrast to an illegitimate barrier to free trade broke away and GATT disputes mounted.107
As a general thread, GATT panels sought to argue along lines drawn in the past and manifestly wished to isolate trade objectives from other policy concerns. While the number of disputes surged, the old ethos of GATT trade experts and an esprit de corps retained its grasp on the interpretation of the law. Robert Howse observes that ‘one of the crucial functions of the insider network was to maintain continuity of (p.157) meaning…with respect to treaty interpretation’.108 The insider network figured as an interpretative community and also worked to sustain insulation from seemingly disturbing outside perspectives. It has been rather successful in this regard by creating and maintaining a very high threshold for policies to be justifiable under Art. XX and by trying to create what has been termed a territorial limitation.
2. The creation of a high threshold
Since the early 1980s, a number of policies that did not fit with established patterns hit the GATT dispute settlement system and its community. They put into question the prevailing understanding that trade objectives are fully compatible with other policy concerns and do not give rise to conflicts that could not be managed by the GATT system. Such disputes for instance challenged domestic regulations, which conditioned market access on the fulfilment of certain criteria by the exporter or the exporter’s country. Some early cases were rather obvious attempts by governments to disguise and justify protectionist trade restrictions, others were less clear.
The United States—Tuna dispute provides an illustrative example of what is at issue. It also takes a first small step in the direction of what would eventually become a thick body of case-law giving meaning to Art. XX.109 Canada filed a complaint against actions taken by the US government prohibiting imports of albacore tuna and related products from Canada. The context of events showed that the US took such action in response to the seizure of 19 fishing vessels and the arrest by Canadian authorities of a number of US fishermen that, according to Canada, had fished illegally within 200 miles of its West Coast and thus under its fisheries jurisdiction. The US contested this view of the facts and the legal implications.110 The trade law dispute was but one aspect of a broader quarrel between the two countries about jurisdictional delimitation and the panel underlined that it did not pronounce on that issue but would confine itself solely to examining the actions in light of the GATT provisions.111 Without much difficulty, the panel found the embargo on imports to be in violation of the prohibition of quantitative restrictions (Art. XI).112 This was an easy task and did not yield any surprises. In fact, the parties had already agreed to lift the import ban by the time the panel made its decision. Yet, they also agreed that the panel should continue its work to decide the crucial question ‘whether or not a contracting party should have the right to disregard obligations under the GATT in order to use trade measures to bring bilateral pressure to bear on non-trade issues’.113 This was the question that has pervaded significant parts of GATT/WTO adjudication in the following decades.
(p.158) The US argued in the case at hand that its import ban was based on the Fishery Conservation and Management Act of 1976 (inter alia aiming at the conservation of tuna stocks) and that it was justified under Art. XX(g). The Act of 1976 provided that an embargo on imports should be the reaction to the seizure of ships that were fishing in waters not recognized by the US to be under any state’s jurisdiction. Canada maintained that the Act as well as its sanctioning mechanism were the product of pressure by the US tuna industry and aimed at deterring Canada and other states from enforcing domestic laws that are detrimental to the US tuna industry’s commercial interests.114 In the present dispute, the action was plainly not motivated by conserving tuna stock but just one move in the more complex fisheries squabble. The panel pointed to the telling fact that the US did not subject domestic production or consumption to restrictions equivalent to those projected onto other states. It also found that the US did not subject other species of tuna that are equally under threat of over-exploitation to similar protective regulations. In view of these considerations, the violation of Art. XI could not be justified under Art. XX(g)—a straightforward model case.115
The panel left open, in principle, what it itself highlighted to be the critical question: can market entry be conditioned by policies pursuing non-trade objectives? The disputing parties had notably referred this question to the panel in spite of the fact that the dispute had already been settled. However, the panel apparently did not see itself as being up to the task of answering such a legal question with significant repercussions. It confined itself to pointing out the rather evident fact that the US policy did not really pursue the aim of conserving the livestock of tuna and thus left open the more principled question.
Arguably, the panel’s analysis of whether the US policy did actually pursue its stated aim suggests that these kinds of policies are at least not categorically excluded from the scope of Art. XX. This is how Canada a little later read the report in its defence in Herring and Salmon—the landmark case on Art. XX(g) and on what it means that a policy has to be ‘related to the conservation of exhaustible natural resources’. The case again involved the US next to Canada in a dispute concerning fisheries, but this time in reversed roles. In Herring and Salmon the US claimed that the Canadian prohibition on the exportation of certain unprocessed salmon and unprocessed herring was inconsistent with the GATT and Canada in turn sought to justify its policy with reference to Art. XX(g).116 Canada considered the panel report in United States—Tuna to be a direct precedent and claimed that the panel had erected a four-pronged test: (1) the measure must not be applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination, (2) it must not be a disguised restriction on international trade, (3) it must relate to the conservation of exhaustible natural resources, and (4) it must be made effective in (p.159) conjunction with restrictions on domestic production or consumption.117 Canada maintained that the export prohibition was in place to allow for a precise catch control indispensable for managing the stock, that the measure met all parts of the test, and that that was all there was to it. Notably, it stressed that the provisions of Article XX(g) only required it to demonstrate that its measures related to conservation, not that they were ‘essential’ or even ‘necessary’.118
The United States hit the weak spot in the line of defence by pointing out that the export prohibition itself does little to protect the vulnerable stocks and that other measures were available for an accurate catch control—Canada did in fact use alternative measures that were a lot less trade restrictive for other species. The United States was also able to produce a report of the Canadian Department of Fisheries and Oceans stating that the export restrictions were in place for the purpose of ‘promoting jobs for Canadians (by increasing the amount of processing done in Canada)’.119
The panel saw the task before it to lie in the interpretation of ‘related to’ in Art. XX(g). It found that the text does not state how trade measures have to be related to the aim of conservation, contrasted paragraph (g) with other paragraphs, and came to the conclusion that measures for the conservation of exhaustible resources may possibly be justified even if they are not strictly necessary or essential.120 In its decisive move, however, it said that the requirement that the measure must be ‘primarily aimed at’ the conservation of exhaustible natural resources was to be considered as ‘relating to’ conservation within the meaning of Article XX(g).121 It did not hint at any authority or offer any reasoning that might support its interpretation. Examining whether Canada’s export prohibition on certain unprocessed salmon and unprocessed herring primarily aimed at the conservation of exhaustible natural resources, the panel had an easy time finding that this was not the case. It placed the weight of its conclusion on the fact that there were alternative means available that Canada could have employed. The fact that Canada did not do so with regard to certain herring and salmon stocks is proof of ulterior motives, i.e. the protection of employment within the fish processing industry.122 The panel looked neither into Canada’s legislative history nor into the decision-making process leading to the export prohibition but relied on what may be termed an objective test of primary intent.123
The panel’s invention of a ‘primarily aimed at’ standard has had much appeal and a lasting impact. With Herring and Salmon the panel successfully established its new standard as a reference point in legal discourse, overlying the treaty text. Subsequent legal interpretation centred on whether a measure was ‘primarily aimed at’ the conservation of exhaustible natural resources as if the treaty text (p.160) had been forgotten. A reference point in interpretation would no longer be ‘related to’ but the panel’s precedent.
In the immediate follow-up, a panel under the Canada–US Free Trade Agreement, which incorporates Art. XX GATT by reference, was set up to examine whether Canada’s move away from an export prohibition towards a landing requirement for all salmon and herring caught on its West Coast (the requirement that they be first brought onto land in Canada) could now be justified on the basis of Art. XX(g).124 The US and Canada both referred right away to ‘primarily aimed at’ as the relevant standard for the case.125 The panel then did recall the treaty text and went on to interpret it along the lines of the Herring and Salmon precedent, quoting the latter at length and finding that a measure has to be ‘primarily aimed at the conservation of an exhaustible natural resource to be considered as relating to’.126 On this basis it found Canada’s new policy to be an unjustified trade restriction because there were alternative measures available to Canada that it could have employed to meet the aim of conserving fish stocks. In short, there would have been less trade restrictive alternatives.127 An analysis of whether the measure employed is least trade restrictive establishes whether it is ‘primarily aimed at’ so that ‘related to’ is now used to mean ‘least trade restrictive’.
It might be suggested that these decisions on the interpretation of Art. XX(g) are only binding between the identical parties to both disputes; after all, they so far only involved Canada and the US. This would miss the effect that interpretations with authority have on the law and it falls short of capturing what actually happens in the practice of legal discourse. The panel in United States—Gasoline, one of the first within the WTO context, dealt with a complaint by Brazil and Venezuela against the United States involving Art. XX(g) and, again, the panel quotes at length from Herring and Salmon to conclude that ‘the less favourable baseline establishments methods at issue in this case were not primarily aimed at the conservation of natural resources’.128 It thus confirmed that the relevant issue was to interpret ‘primarily aimed at’ and further corroborated the view that this requires a measure to be the least trade restrictive. In United States—Gasoline the panel was overruled on this point on appeal, but also the Appellate Body goes to great lengths in its treatment of the Herring and Salmon precedent to note that the formerly prevalent interpretation used to effectively level out any differences between ‘related to’ and ‘necessary’ as it is mentioned in other paragraphs of Art. XX.129 The AB then continued to deliberately reject this interpretation with considerable argumentative force—thereby confirming that this had been the law as it stood before its decision.
(p.161) Suggesting that judicial decisions are only binding inter partes is at severe odds with large chunks of legal practice, just as saying that international law knows no system of precedents. Participants in the practice of interpretation do not generally even make such doctrinal arguments but rather fight about the meaning of earlier decisions—regardless of whether they were parties to the dispute—just as they base their claims on treaty provisions.
This is equally evident in the communicative practice that developed the meaning of ‘necessary’. The defining showdown took place in the dispute between the European Commission and the United States on the application of Section 337 of the US Tariff Act of 1930 that subjects foreign products to distinct procedures. In the eyes of the EC this constituted a violation of the national treatment rule in Art. III GATT and was not justifiable under Art. XX(d). The decisive point of controversy was vested in interpretative claims about the meaning of ‘necessary’ in Art. XX(d). Every party seemed to argue against the background of their own legal system.130 The EC argued that no measure could be justified unless it was the least trade restrictive measure available.131 The US maintained to the contrary that such a requirement could not be read into the GATT and all that was required was that the measures meet a more lenient rational basis standard.132 The panel noted this difference and in the same breath bluntly stated that ‘necessary’ in Art. XX(d) compels a least restrictive trade measure test:
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.133
Maybe the issue was that clear to the panel because its president was Pierre Pescatore, a former Judge at the European Court of Justice who was of course well familiar with the standard of review advanced by the EC.
The US, however, could turn around and use the case it had just lost in its complaint against Thailand’s restrictions and internal taxes on imported cigarettes. The panel in Thai Cigarettes found these restrictions to be GATT inconsistent and not justified under Art. XX(b) precisely because alternative measures were available that could have met Thailand’s public health concerns. It held that ‘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 (p.162) be expected to employ to achieve its health policy objectives’.134 For example, the panel continued, Thailand could have examined the quality of foreign cigarettes, or it could have enacted a number of consumer warning mechanisms, public information campaigns, and requirements such as a complete disclosure of ingredients coupled with a ban on unhealthy substances.135
The panel’s reasoning is remarkably determined by the objective of corroborating a high categorical standard that saves the GATT system from protectionist policies which might otherwise enter via Art. XX. According to its categorical pronouncement, the existence of an alternative that is less trade restrictive and reasonably available suffices to render a measure unnecessary. It merits emphasis that this general statement then formed the reference point in legal discourse according to which the legality of the measure at hand was analysed. Also, the panel did not consider the practical consequences of its findings, namely that alternative measures could entail insurmountable administrative or financial obstacles for Thailand.
Upon Thailand’s request, the panel had called for a submission by the World Health Organization (WHO) on the issue but basically ignored it in its decisive steps of reasoning. The WHO in principle supported Thailand’s measures and suggested that alternatives would be unduly burdensome and risky. It opined that Thailand’s regulations were in line with the recommendations developed by the WHO Expert Committee on ‘Smoking Control Strategies in Developing Countries’ and further argued that due account must be given to Thailand’s actual capabilities.136 But this did not sway the panel.
Lastly, it is worth highlighting that the panel did not pick up the argument the US had submitted on the chapeau of Art. XX; namely, that a measure under the general exceptions provision must not be a disguised restriction of international trade.137 This might have been a more appropriate basis for anchoring the judgment in the norm text. But previous panels had already put the narrow focus on the word ‘necessary’.
Over time, GATT panels dealt with a number of disputes that juxtaposed trade objectives with other public policy considerations and they managed to maintain GATT in rather splendid isolation. They did so by creating a standard for regulators that was very difficult to meet.138 For a measure to be ‘necessary’, or even if it was only to ‘relate to’ another legitimate aim, it had to be the least trade restrictive measure reasonably available. What might seem reasonable in the eyes of (p.163) the GATT panel in Thai Cigarettes might in fact be an insurmountable burden for Thailand to overcome. In the making of this interpretation of general exceptions, panels reasoned along functionalist lines and stressed trade objectives. How this rhetoric played out in legal practice may further be shown in the analysis of another way in which panels sought to save the GATT system from policy considerations with a trade-distortive potential: the practice of adjudication arguably created a territorial limitation on the scope of the general exceptions.
3. A territorial limitation?
Disputes at the intersections between trade law and non-trade public policy aims grew in prominence in the early 1990s, fuelled by the panel reports in the Tuna—Dolphin cases. At issue were US policies conditioning market access for tuna exporters and aiming at the protection of dolphins. In Tuna—Dolphin I Mexico complained against the US prohibition of imports of tuna harvested in a way that, according to the US, posed an exceedingly high risk to dolphins.139 The panel found the import prohibition to be in violation of Art. XI GATT and not justified under Art. XX(b) or (g).140 Picking up the arguments of the parties, it saw the crucial question to be ‘whether Article XX(b) covers measures necessary to protect human, animal or plant life or health outside the jurisdiction of the contracting party taking the measure’.141 Mexico had submitted that the justification advanced by the US would require a concept of extraterritoriality to be inserted into Art. XX and that the panel was in no position to do so. Nothing in the agreement, it claimed, entitled the US to subject production methods within Mexico’s jurisdiction to US legislation.142 The concept of extraterritoriality was used to refer to the fact that policies aimed at subject matters beyond the jurisdiction of the respective polity. The US argued in contrast to Mexico that nothing about its legislation conditioning market access was ‘extraterritorial’. It rather maintained that it was quite natural that domestic trade measures had effects outside the contracting party’s territory.143
The panel noted that the text of Art. XX does not provide an answer to the question before it and it thus turned to the drafting history and the purpose of the provision (from the word to its sense and then to its force). It purported to see in the drafting process that the provisions were only meant to allow the protection of human, animal, and plant life that are under an importing country’s jurisdiction.144 The panel then expressed its apocalyptic angst:
(p.164) The Panel considered that if the broad interpretation of Article XX(b) suggested by the United States were accepted, each contracting party could unilaterally determine the life or health protection policies from which other contracting parties could not deviate without jeopardizing their rights under the General Agreement. The General Agreement would then no longer constitute a multilateral framework for trade among all contracting parties but would provide legal security only in respect of trade between a limited number of contracting parties with identical internal regulations.145
If members could unilaterally prohibit imports on the basis of the conditions under which the products have been produced, the panel argued, the multilateral trade regime would ultimately collapse. The US could thus not justify its policy under Art. XX(b)—nor, for the same reason, under subparagraph (g).
The panel could have stopped here. Instead it proceeded to cultivate and strengthen the jurisprudence on the relationship between the concrete policy and the stated aim. Even if an extraterritorial protection were permitted, the import prohibition would still not be justified because it was not ‘necessary’. With reference to Thai Cigarettes, the panel found that a reasonable alternative was available; namely, negotiating international cooperative agreements. The panel even raised the threshold a notch: it required that the US ‘had exhausted all options reasonably available to it to pursue its dolphin protection objectives through measures consistent with the General Agreement’ for its policy to qualify as a necessary exception.146 And as concerns subparagraph (g), with reference to Herring and Salmon, the measure did not primarily aim at the conservation of natural resources, for the same reason as it was not necessary under subparagraph (b).147 The panel’s reasoning as to whether the policy was ‘necessary’ or ‘related to’ appears to be a superfluous second basis of illegality after finding that extraterritorial policies are generally excluded. The panel did not however lose the opportunity to support its finding also on these grounds. Remarkably, this GATT decision of 1991 is closely interwoven with a number of precedents—referenced in 45 footnotes on its 40 pages. The practice of interpretation was already deeply embedded in a thick structure of adjudicatory practice that directed all actors’ interpretations.
The report in Tuna—Dolphin I was heavily criticized by environmentalists and sternly defended by the GATT secretariat. The latter acted in an effort to successfully keep non-trade issues from interfering with trade law. On the occasion of the 1992 Rio Summit of the United Nations Conference on Environment and Development the secretariat had crafted a report on trade and environment stressing the point that trade liberalization only has negative environmental consequences in the absence of governmental action—thus testifying to trade experts’ trust in the regulatory capacity of the state.148 What is more, it then focused on the looming (p.165) threat of protectionism and spoke out strongly against unilaterally conditioning market access by regulations that invoke public policy considerations in their justification. It even went on to consider the threat that might arise in case protectionists and environmentalists came together.149 The report categorically argued against unilateral measures and echoed the critical question that the early panel in United States—Tuna had ducked: ‘whether or not a contracting party should have the right to disregard obligations under the GATT in order to use trade measures to bring bilateral pressure to bear on non-trade issues.’150 The secretariat held such measures to be unacceptable because they ‘dictate changes in environmental policies of other nations’. It found the solution to lie in multilateral standards, thus attempting to free itself and the GATT system from the burden of giving further thought to this issue. With this argument, the secretariat also tried to reject the mounting criticism by playing the ball, with the help of the reasoning in Tuna—Dolphin I, to the political-legislative process.151 For the time being at least, it did in fact establish that trade was trump.
This bottom line constituted the major point for critique.152 Above all environmentalists argued along the lines of the US that there was nothing extraterritorial about the regulations under scrutiny.153 Others went further and demanded that GATT law open up to other policy considerations on the basis of Art. XX. Some already argued that panels should explicitly balance trade objectives against other aims.154 Many commentators found good reasons in the panel’s decision and vested their hopes in political processes to correct the issues.155 However, political agreement was not forthcoming and the controversy instead continued to make its way into GATT adjudication. International trade norms on this issue continued to be primarily formed in the practice of interpretation.
In Tuna—Dolphin II, the European Communities challenged the US import prohibition of tuna as well as the intermediary nation embargo which was supposed to prevent the import prohibition being circumvented by passing tuna through a third country. The US required that a third country, not itself harvesting tuna but (p.166) importing and then exporting tuna, had to have a primary embargo itself or it would otherwise be subject to the US import prohibition. The panel observed that the parties, clearly under the spell of Tuna—Dolphin I report, had placed great emphasis on the question of whether a policy could aim beyond a contracting state’s territorial jurisdiction. In contrast to Tuna—Dolphin I, the panel could not find support in the drafting history for the conclusion that there was a categorical jurisdictional limitation.156 Nor does general international law impede states from pursuing aims outside its territorial jurisdiction by internal regulation, so the panel found.157 This was an important and lasting change in the interpretation of Art. XX. But it was immediately called into question.
The panel proceeded by examining whether the measures were ‘relating to’ or ‘necessary’ and here it again gave much weight to considerations of jurisdiction. Echoing Tuna—Dolphin I, it found that the GATT would no longer serve as a multilateral framework for trade among the contracting parties if trade access were to depend on the internal regulations of the exporter and whether or not they conformed to the demands of the importing country.158 At this juncture, it again held the matter of jurisdiction to be the decisive issue and found that a member could not force others to change policies within their own jurisdiction. The panel reasoned that such trade measures could simply not be primarily aimed at the conservation of exhaustible natural resources, nor could they be considered necessary for the protection of animal life or health in the sense of Art XX(b).159 The panel in effect upheld a territorial limitation but shifted its place into an analysis of primary intention.
The reception of Tuna—Dolphin II was predictable and fell along the lines drawn in the reactions to Tuna—Dolphin I. Much has been made of whether the treatment of the crucial question in terms of extraterritorial jurisdiction was actually adequate.160 Be that as it may, it is hard to deny that it is a valid question to ask ‘whether or not a contracting party should have the right to disregard obligations under the GATT in order to use trade measures to bring bilateral pressure to bear on non-trade issues’.161 The panel in Tuna—Dolphin II again suggested that the (p.167) question’s resolution should be pursued in political-legislative processes and noted too in this vein that the relationship between environmental and trade measures was now to be considered in the negotiations leading to the creation of the WTO.162 Notably, the contracting parties adopted neither Tuna—Dolphin decision. And yet, both panel reports had repercussions that were felt strongly at the inception of the WTO. They tangibly redistributed argumentative burdens and shaped legal discourse.163
C. Article XX in the era of the WTO
Semantic changes in the wake of the transformative years surrounding the inception of the WTO in 1995 are once more closely intertwined with institutional reforms. In particular, the working of precedents has come to be of increased significance in view of the dynamics unfolding in a dispute settlement mechanism with appellate review (1.). GATT precedents still directed actors’ arguments on Art. XX in the early WTO cases but were forcefully redirected by the new Appellate Body, both with regard to the threshold that policies have to meet in order to be justifiable on the basis of general exceptions as well as with regard to such policies’ territorial scope (2.). Interpretative claims of the adjudicatory bodies have then once more focused on the meaning of ‘necessary’ while the key issue has been whether assessing the necessity of a policy implies a proportionality test and what such a test would actually entail (3.).
1. Institutional changes and the working of precedents
Both Tuna—Dolphin cases had pointed to the political-legislative process as the appropriate venue for resolving tensions between trade obligations and other areas of public policy. In particular, environmental objectives began to take the form of legal obligations so that actual legal conflict started to be a real possibility. The negotiations in the Uruguay Round leading up to the Marrakesh Summit of April 1994 were thus burdened with specifying the provisions on general exceptions and with guiding adjudicators on the still daunting question relating to the intersection between trade objectives and other public policy concerns.
With strong leadership on the part of the US and in light of considerable dissatisfaction with how the GATT panels had handled non-trade concerns, negotiators attempted to resolve the controversy by enacting new legal provisions on the issue. Little agreement could however be reached and protracted disagreement only allowed for a rather general and laudatory ‘Decision on Trade and Environment’ which states that ‘[t]here should not be, nor need be, any policy (p.168) contradiction between upholding and safeguarding an open, non-discriminatory and equitable multilateral trading system on the one hand, and acting for the protection of the environment, and the promotion of sustainable development on the other’.164 This was of course of little help as disputes arising from contradictions had already been plaguing GATT panels for some time. The task of finding a remedy was delegated to the newly established Committee on Trade and Environment (CTE). The CTE first discussed ambitious reforms of Art. XX but has so far not been able to secure even a modest consensus on the interpretation of general exceptions, let alone an interpretative statement or even a reform of the treaty text.165 Thus, the task again largely fell on the adjudicators.
Non-trade concerns did, however, find their way into the preamble of the WTO agreement providing that trade relations ‘should be conducted with a view to raising standards of living,…while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development’. This wording became an important reference point in legal discourse ever since the Appellate Body took its first decisive steps.
Furthermore, a number of additional agreements could be reached, some of which might have repercussions on what Art. XX means. The Agreement on Sanitary and Phytosanitary Measures (SPS Agreement) notably provides in its Art. 2(4) that ‘[s]anitary or phytosanitary measures which conform to the relevant provisions of this Agreement shall be presumed to be in accordance with the obligations of the Members under the provisions of GATT 1994 which relate to the use of sanitary or phytosanitary measures, in particular the provisions of Article XX(b)’. Also the Agreement on Technical Barriers to Trade (TBT Agreement) may be of relevance with regard to the meaning of Art. XX even if it does not contain any similar express reference.
When it comes to the topic of trade and environment, legislative change has thus overall been at best modest. Most importantly, Art. XX GATT has remained as it stood. Major changes did however occur with regard to the institutional structure and the dispute settlement mechanism.166 The GATT era had been marked by an intriguing pattern of institutional growth and by increasingly sophisticated dispute settlement procedures. Now the detailed Dispute Settlement Understanding (p.169) (DSU) formalized previous practices and introduced a number of further innovations. One of the principal novelties was the possibility for appellate review. A number of indicators suggest that the new Appellate Body was supposed and expected to have but a limited role. It might in fact have looked like a not so significant by-product of the whole package deal. According to a proposal by the European Communities the Appellate Body would only come to act if the panel report was ‘erroneous or incomplete’.167 Canada saw its role in correcting ‘fundamentally flawed decisions’ and also the US thought that the new body would only review ‘extraordinary cases’.168 The contracting parties apparently thought that appellate review would be so limited that its seven members, a relatively small number anyway, would only need to be employed part-time and could be paid in addition for actual working days.169
From the day of its creation, however, the Appellate Body has grown from an ‘afterthought to a centrepiece’ as now Appellate Body member Peter van den Bossche summarized.170 Van den Bossche makes out six reasons for the AB’s rise to success: first, its composition of mostly international lawyers who had general legal training and who were not excessively focused on trade law; second, its Working Procedures and the implementation of the principle of collegiality; third, the AB’s reliance on the VCLT and on the norm text as a starting point of legal interpretation; fourth, the frequent recourse to appellate review—in the first two years following the establishment of the AB every panel report was appealed; fifth, the building up of persuasive authority and a consistent body of case-law; and sixth, the appropriate balance struck between trade objectives and other public policy goals in its jurisprudence.171
The institutional changes brought about by the Marrakesh Agreement and the DSU included a number of elements that aimed at strengthening the enforcement of commitments. This aim inevitably implied that the adjudicative bodies would enjoy greater autonomy and authority in relation to the contacting parties.172 A crucial element was the change from a consensus requirement in the adoption (p.170) of the panel and Appellate Body reports to a negative consensus rule. A consensus would now be required in order to reject a report. In all practical circumstances this amounts to automatic adoption with a lasting effect on the relationship between adjudication and political-legislative control.173
State representatives have thus sought to limit the lawmaking dimension of judicial interpretation by tying the adjudicators to their consent in a number of ways. An outstanding manifestation of anxiety that the adjudicators might not always live up to their ideal role of finding the law that is present in the applicable treaties can be found in the intriguing Art. 3(2) DSU. It stipulates that recommendations and rulings of the DSB ‘cannot add to or diminish the rights and obligations provided in the covered agreements’.174 This provision was apparently so dear to the contracting parties that they reiterated this wording verbatim in Art. 19(2) DSU. It has figured as a reference point in panel proceedings and in the discussion of reports to buttress an actor’s claim that the panel or AB transgresses its legal function and engages in lawmaking. While empirically speculative, it may well be suggested that this provision has done little to work against the phenomenon of judicial lawmaking. It is hard to see what more it does than to restate the adjudicators’ task of applying the law. In particular, it does not affect the working of case-law in developing meaning or, more generally, communicative practices from making law.
Article 3(2) DSU also provides that ‘[t]he dispute settlement of the WTO is a central element in providing security and predictability to the multilateral trading system’. In its early steps in Japan—Alcoholic Beverages II the Appellate Body leaned on this provision to argue that reports, even if they do not amount to binding precedents, ‘create legitimate expectations among WTO Members, and, therefore, should be taken into account where they are relevant to any dispute’.175 The Appellate Body went on to concur with the panel that unadopted reports have no legal status in the GATT/WTO system—bear in mind, however, that also adopted reports do not have anything that could sensibly be termed a legal status—but ‘a panel could nevertheless find useful guidance in the reasoning of an unadopted panel report that it considered to be relevant.’176 The Appellate (p.171) Body’s take on the working of precedents underscores that a precedent’s quality of being binding or not is not determinative of its authority in legal discourse.
Considerable evidence for the authority of precedents already stems from the GATT era. The proceedings in the Oilseeds case provide a most interesting illustration. The disputing parties and the panel all argued with reference to the Canned Fruit report, which had not only remained unadopted due to the EC’s objections but was even withdrawn from the GATT Council’s agenda on behalf of the US as part of the final settlement.177 The fact that all parties and the adjudicators in Oilseeds nevertheless fought vehemently about its meaning is a strong indication for the power of precedents in trade law and for the thought that much of the impact of judicial decisions depends on their authority or, better put, on the authority that can be made of it, rather than its ‘legal status’. Participants in legal discourse do not usually even put forward the argument that earlier decisions are not binding or that they are not bound by them, but they rather try to distinguish them or, even more so, struggle over their meaning.
As of late, the Appellate Body has furthered the authority of its reports as decisive reference points for panel proceedings. To a large extent this dynamic has unfolded in the context of disputes over ‘zeroing’, a method for calculating anti-dumping duties.178 It appears to be rather evident from the negotiating history of the Anti-Dumping Agreement (ADA) that the WTO members could not come to an agreement over the legality of zeroing. In a last minute compromise, they added Art. 17(6)(ii) to the ADA testifying to their disagreement: ‘Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities’ measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.’179
A lot could be made out of the assumptions and understandings of interpretation lingering behind this wording.180 In the present context it is worth highlighting that panels have recurrently found that nothing prohibits zeroing while the Appellate Body has consistently reversed panel reports on this matter. The AB eventually boldly backed the authority of its decision. In United States—Oil Country Tubular Goods Sunset Review it already went beyond its position in Japan—Alcoholic Beverages II (p.172) and found that it is not only appropriate for panels to follow AB jurisprudence but that it would even be expected that they do so.181 In a renewed appeal on issues of zeroing, in United States—Stainless Steel (Mexico), the AB then recalled that the WTO Members have repeatedly stressed the importance of consistency and stability in interpretation. The AB emphasized that its findings are clarifications of the law and, as such, are not limited to the specific case. It strongly criticized the panel:
We are deeply concerned about the Panel's decision to depart from well-established Appellate Body jurisprudence clarifying the interpretation of the same legal issues. The Panel's approach has serious implications for the proper functioning of the WTO dispute settlement system….182
The EC had joined the proceedings as a third party and attempted to push the argument even further. It argued that the AB should make it unambiguously clear that the panels are not only expected but also obliged to follow the AB’s findings. The EC argued that failing to do so would be in violation of the panel’s obligations under Art. 11 DSU to conduct an ‘objective assessment’ of the matter before it.183 The AB did not go that far. But it did create a lingering threat by suggesting that disregard for its precedents might actually amount to a panel’s failure to properly exercise its judicial function.184
What has already been shown in the practice of legal argumentation with regard to Art. XX throughout the GATT era now appears but evident: GATT/WTO judicial practice has created a body of precedent that strongly bears on what international trade law really is. The working of precedents sustains adjudicators’ high degree of semantic authority in the making of law by way of interpretation and participants in legal discourse can simply not escape the discussion of previous decisions. Interpreters are forced to do so as a matter of fact while practice also portrays a sense that they should relate their arguments to precedents. How does the process of legal development by way of interpretation unfold with regard to the general exceptions of Art. XX GATT in the era of the WTO?
2. A new beginning with the Appellate Body
The very first case that came before a panel within the brand new WTO institutional framework promptly played public policy concern against trade objectives. (p.173) In United States—Gasoline, Brazil and Venezuela complained about US measures in the implementation of its 1990 Clean Air Act. The US required foreign exporters of gasoline to meet certain compositional and performance specifications so that pollution from gasoline combustion would not exceed the levels of 1990. The Clean Air Act established baselines of pollution levels for this purpose. A cause of complaint was that the methods for setting up the baselines differed for domestic and foreign refiners in quite evident violation of Art. III(4) GATT.
Treading the path set in GATT jurisprudence, the panel held that the measures imposed on foreign producers of gasoline could neither be justified under Art. XX(b) nor under Art. XX(g). It found that there was a less trade restrictive alternative reasonably available so that the measures taken were not necessary in the sense of Art. XX(b).185 With Herring and Salmon it argued that ‘relating to’ in Art. XX(b) means ‘primarily aimed at’ and that primary intent can be inferred from the fact of whether the measure was least trade restrictive—thus, again, in effect levelling out any difference between the standards.186 With regard to both justifications the panel noted that finding the measure not to be least trade restrictive exhausts the issue. It was thus not necessary to examine the legality of the measures further under the chapeau of Art. XX. The panel’s reasoning had by now become an easy exercise. At the time, it was a predictable statement of the law.
The US appealed and the Appellate Body’s decision then demonstrated a remarkable shift in the practice of interpretation and marked the direction of legal developments to come. The AB redirected crucial steps in this easy exercise with a fresh look at the text and with a fresh general outlook. The aura of a new beginning still did not elevate its reasoning above the discussion of precedents. Its agency remained embedded in the structures of legal practice and its arguments testify to the strong spell exerted by earlier decisions. The AB concentrated on the justification by way of Art. XX(g) and criticized the panel’s use of Herring and Salmon, observing that the prevalent interpretation of ‘related to’ had been that measures must be ‘primarily aimed at’ the stated legitimate objective and continued to point out that this had led to a least restrictive trade test as part of establishing primary intent. Such an interpretation was indeed carried by constant jurisprudence. The AB saw itself forced to engage with this interpretation, took up the challenge head on, and managed to get out of this deadlock. How did it do so?
The AB found the prevalent interpretation of Art. XX(g) to be in violation of the Vienna Convention on the Law of Treaties (VCLT) because it disregarded the difference in wording between the paragraphs.187 It is interesting that none of the disputing parties had questioned that ‘related to’ means ‘primarily aimed at’—this seems to have already been beyond doubt even if, as the AB highlights, ‘the phrase “primarily aimed at” is not treaty language and was not designed as a simple litmus (p.174) test for inclusion or exclusion from Art. XX(g)’.188 Nonetheless, and with some uneasiness, the AB continued to examine whether the measures at issue were ‘primarily aimed at’ the conversation of exhaustible natural resources, using this wording for a more lenient standard. It concluded that the measures taken may qualify under paragraph (g) and overturned the panel on this point. It thus broke with precedents but connected to them. It continued to use the expression ‘primarily aimed at’ but used it with a different meaning.
The AB then turned to the chapeau of Art. XX whose main purpose it found to lie in preventing the abuse of exceptions.189 It argued and stressed that Art. XX requires a two-tiered analysis: first of the measure at issue and whether it falls into the purview of one of the paragraphs (a) to (j), and second a further appraisal of whether the same measure is needed under the requirements set out in the chapeau. In the second step it is no longer the content of the specific measure, thus the Appellate Body, but the manner in which it is applied that is decisive.190 Moreover, the panel had applied the necessity test as it was developed in Section 337 and Thai Cigarettes; namely, that ‘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’.191 The Appellate Body now suggested that in applying this test, the panel unduly mingled questions of justification with questions of what would have been permissible under Art. III(4) GATT. At the stage of justification, the AB argued, the legal analysis must be centred on Art. XX. The panel (and its predecessors) had violated the general rule of interpretation providing that interpretation gives effect to all the terms of the treaties. With reference to the ICJ’s Corfu Channel and Territorial Dispute judgments the AB stressed that it could not adopt an interpretation that would reduce the whole Art. XX to redundancy or inutility.192 With this reasoning the AB also firmly positioned itself as partaking in the general international law discourse.
In the case at hand, the AB found the US regulation for foreign refiners of gasoline to amount to an unjustified discrimination because the US did not show why its concerns could not have been resolved by international cooperation, nor did it make an effort to enter into such cooperation before putting its regulatory system in place. The measure was also a disguised restriction of trade because (p.175) foreign producers had to bear avoidable costs as a result of the regulation that domestic producers did not have to suffer.
The shift in emphasis from the individual paragraphs to the chapeau in examining whether a measure may be justified by Art. XX has come with a significant change in the possibilities for future development. The panels’ jurisprudence had reached a dead end, categorically brushing aside any policy measure that was not least trade restrictive. On the basis of the chapeau, the AB now opened up a new chapter of jurisprudence, connecting with the past but setting off in a different direction. It is also in this first report in United States—Gasoline that the AB expands the outlook for the interpretation of trade law beyond the narrow functionalist lines that had confined previous practice. The GATT is not, the AB noted en passant and with considerable repercussions, ‘to be read in clinical isolation from public international law’.193 This statement has come to be of immediate relevance in the AB’s second decisive redirection of legal argument with regard to Art. XX at the inception of the WTO. After it had developed the interpretation of the threshold that a measure has to meet in order to be justifiable, it turned to the still pending question that came under the heading of ‘extraterritoriality’.
United States—Shrimp was concerned with US import restrictions on shrimp and shrimp products. The US required that shrimp be harvested in a way not exceedingly harmful for sea turtles. Only then could they be imported. This case resembled Tuna—Dolphin I in almost all relevant elements. It is most remarkable, however, that despite the fact that neither Tuna—Dolphin report had been adopted, all parties as well as the panel argued precisely against the background of these reports. In both GATT cases, the US had maintained that there was nothing extraterritorial about its protection of dolphins beyond its territory by way of internal regulation. Nor does Art. XX, in the view of the US, exclude the justification of such measures even if they were termed ‘extraterritorial’. Notably, the US did not attempt to argue that the dolphins were under its jurisdiction but rather that ‘dolphin roamed the seas and were therefore common resources within the jurisdiction of no one contracting party’.194 Under the impact of the Tuna—Dolphin reports’ focus on issues of jurisdiction and in light of the discourse on ‘extraterritoriality’, the US now thought it safer to add that sea turtles ‘regularly spent part of their lives in waters subject to US jurisdiction’.195
In its legal analysis, the panel does not recognize this shift in argument and poorly conflates the claim to a jurisdictional link with the suggestion that sea turtles are a shared global resource.196 The panel is wholly unimpressed with the AB’s (p.176) report in United States—Gasoline and follows the argumentative pattern carved out in GATT jurisprudence. It resumes the apocalyptic picture that had been drawn in the (unadopted) Tuna—Dolphin I panel report. If the US, or any other importing country, were allowed to require that importers meet regulatory standards that are set unilaterally, then the whole multilateral trading regime would be at risk. Trade would, it again argued, only be possible between a limited number of states with identical domestic regulation. Should the US measures be found justifiable under Art. XX, this would be the end of a free trade world. It is the very nature of the measures, the panel argued, that puts the multilateral trading system at risk.197 The only repercussion that United States—Gasoline had on the panel’s reasoning is that it now tied it analysis to the chapeau of Art. XX, but evidently it saw the chapeau as just another reference point for its ready-made reasoning.198
In its momentous United States—Shrimp report the Appellate Body overturned the panel’s and its GATT predecessors’ categorical argument that unilateral internal regulation for non-trade purposes and negative implications for free trade would in every case mean the end of the free trade world. It redirected the practice of interpretation and established a lasting precedent on how to deal with justifications on the basis of Art. XX. The US had argued on appeal that the panel judged the legality of its measures on the basis of whether they constituted a ‘threat to the multilateral trading system’. It maintained that this test has no basis in the text of the GATT and, leaning on Art. 3.2 DSU, it argued that it diminishes contracting parties’ rights under Art. XX.199 The US was successful with this argument. Mirroring its report in United States—Gasoline, the AB criticized the fact that the panel had not followed the international law rules of interpretation and again underscored that the first task of the interpreter is to examine the ordinary meaning of the words of a treaty.200 Contrary to the panel’s reasoning, the chapeau cannot serve as a basis for excluding a whole range of policies and according to the Appellate Body it rather speaks of the manner in which policies are applied. Textual and contextual evidence indicates that the purpose of Art. XX is not to safeguard a functioning multilateral trading system but rather the abuse of exceptions, the AB argued. Therefore, again reiterating its finding in United States—Gasoline, it first had to be established whether the policy falls within the purview of one of the paragraphs and, secondly, whether the manner in which it is applied amounts to an abuse.201
The AB could have confined itself to precisely this programme. There is little doubt that the measures did in principle qualify under paragraph (g). The decisive issue then was whether they conformed to the demands of the chapeau. The Appellate Body’s legal analysis at this stage is remarkably strong and the fortress of GATT jurisprudence and its legacy embedded in the panel reports crumble under its impact. The AB found that the purpose of a measure could not be (p.177) invoked so as to categorically exclude a whole range of measures from the purview of Art. XX; the chapeau rather deals with the manner in which the policy is applied in order to separate illegitimate protectionism from justifiable measures.202 The AB noted that neither Art. XX nor WTO law in general can be read so as to give effect to overarching trade objectives pushing aside all other considerations. It cited ample evidence from the Uruguay negotiations, the preamble to the WTO Agreement, and the Decision on Trade and Environment in support of its claim.203 At the case at hand, however, the Appellate Body found that the US policies amounted to an unjustifiable discrimination of international trade because the US had failed to negotiate seriously with the complainants.204 It was also an arbitrary discrimination because of the regulations’ rigidity and inflexibility. The implementation of the regulations also lacked transparency and procedural fairness.205
The Appellate Body did, however, take a further step that it couched between these two parts of its legal analysis. It argued that measures seeking justification under Art. XX will in most practical circumstances be measures ‘conditioning 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’. It did not explicitly reference the unadopted Tuna—Dolphin panel reports but they are clearly the target of its reasoning. To argue that such ‘extraterritorial’ features make measures a priori incapable of justification under Art. XX, the Appellate Body held, would render ‘most, if not all, the specific exceptions of Art. XX inutile, a result abhorrent to the principles of interpretation we are bound to apply’.206 However, a little later the Appellate Body stated that it does ‘not pass upon the question of whether there is an implied jurisdictional limitation in Article XX(g), and if so, the nature or extent of that limitation’.207 In the case at hand it could rely on the sufficient territorial nexus between sea turtles and the US. The AB did however line up all the arguments that were necessary to eventually ‘overrule’ the GATT reports on this issue.
The findings on the principled scope of Art. XX were not precisely necessary in overturning the panel, they mark a stark departure from the traditional take on the issue, and interestingly form the centre of controversy in a request for surveillance according to Art. 21(5) DSU. In this second shot at challenging US measures in the implementation of the findings in United States—Shrimp, the claimant, Malaysia, again emphasized the unilateral nature of the US regulations conditioning market access and argued that such measures quite inevitably result in arbitrary or unjustified (p.178) discrimination, recalling the apocalyptic scenario of the end of the free trade world. The panel rejected this claim closely along the lines of the AB report. Malaysia appealed and also noted that the panel had unduly relied on the AB report rather than its own objective assessment of the matter. It argued further that the AB’s findings to the effect that unilateral measures such as those by the US were not a priori excluded from the scope of Art. XX were only dicta.
With regard to the preliminary question of whether the panel dutifully fulfilled its obligation under Arts 11 and 21(5) DSU or unduly relied on the AB report, it is interesting to note that the argument made by Malaysia centred not on an analysis of the DSU, but on the precedent set in Canada—Aircraft (21.5). 208 While Malaysia tried to diminish the force of an earlier decision it evidently saw no better support for doing so than with the help of another earlier decision. The AB rejected Malaysia’s appeal on this point and confirmed the reasoning of the panel.209
With regard to the scope of Art. XX and the status of the AB’s findings in this matter, the AB then emphatically stated that its original findings were not dicta but that they rather expressed principles central to its ruling. It continued:
The reasoning in our Report in United States—Shrimp on which the Panel relied was not dicta; it was essential to our ruling. The Panel was right to use it, and right to rely on it. Nor are we surprised that the Panel made frequent references to our Report in United States—Shrimp. Indeed, we would have expected the Panel to do so. The Panel had, necessarily, to consider our views on this subject, as we had overruled certain aspects of the findings of the original panel on this issue and, more important, had provided interpretative guidance for future panels, such as the Panel in this case.210
The ‘territorial limitation’ that had come to be part of interpretative practice since Tuna—Dolphin I had been challenged by a general statement in United States—Shrimp which was not precisely necessary for deciding the case and was later elevated in United States—Shrimp (21.5) to form an essential part of the AB’s original ruling.211 This is an intriguing pattern of politics in interpretation: a general statement may at first not be subject to much criticism because it is not decisive and may at a later stage be invoked as a basis for judgments of (il)legality. This could be both cunning technique or unforeseen effect. Either way, the pattern has worked in another decisive step that will come up shortly: EC—Asbestos.212
Before that, a further creative argumentative figure in the Appellate Body’s report deserves to be highlighted; namely, the AB created some freedom for itself with the technique of ‘completing the analysis’. While Art. 17(6) DSU confines appeals to (p.179) ‘issues of law covered in the panel reports and legal interpretations developed by the panel’, the AB has used the technique of ‘completing the analysis’ to widen these limitations. Quite sensibly it had maintained in EC—Poultry that ‘the reversal of a panel’s finding on a legal issue may require us to make a finding on a legal issue which was not addressed by the panel’.213 Under the heading of ‘completing the analysis’ the AB has since frequently continued its reasoning, sometimes with significant repercussions on future interpretations of WTO law. Also in United States—Shrimp it could have said a lot less if it had not completed the analysis.
One last feature that merits being highlighted in the seminal United States—Shrimp report is that the parties to the dispute fought about whether sea turtles are ‘exhaustible natural resources’ at all and it is in this context that the Appellate Body first spelled out its idea of evolutionary interpretation. It noted that ‘the generic term “natural resources” in Article XX(g) is not “static” in its content or reference but is rather “by definition, evolutionary”’.214 It went on to cite other new legal instruments that make references to natural resources and suggests that the meaning of para (g) has to evolve with broader developments in international law. It did so with reference to the ICJ’s Namibia Advisory Opinion where the court stated that some concepts embodied in a treaty are ‘by definition, evolutionary’ and that their ‘interpretation cannot remain unaffected by the subsequent development of law…’.215 ‘Moreover,’ the ICJ continued, ‘an international instrument has to be interpreted and applied within the framework of the entire legal system prevailing at the time of the interpretation.’216 With this reference, the Appellate Body again placed the practice of interpretation in trade law within the broader international law context. The figure of evolutionary interpretation has since flared up time and again; lately it was a hotly disputed topic in China—Publications and Audiovisual Products where China complained on appeal that the panel had changed the meaning of the schedules to which it had committed itself.217 In a rather nonchalant manner the AB intriguingly stated that ‘we consider that the terms used in China’s GATS Schedule (“sound recording” and “distribution”) are sufficiently generic that what they apply to may change over time’.218
(p.180) The institutional changes and the creation of the Appellate Body have truly marked a new beginning in legal practice with regard to Art. XX. While the panels in United States—Gasoline and United States—Shrimp testified to the lasting legacy of the old insider network, the new Appellate Body and its members engaged in incrementally transformative legal practice. Most importantly, they redirected legal argument from an exclusive focus on the paragraphs of Art. XX to a two-tiered analysis that would first examine whether a measure could in principle qualify under one of the paragraphs and then proceed to analyse whether the manner in which it is applied conforms with the requirements of the chapeau. With this move, the Appellate Body took a more considerate stance on environmental concerns as well as other public policy considerations. Rather than effectively establishing that trade is trump, it opened up avenues for member states to rely on general exceptions. At the same time, the Appellate Body opened up new ways for strengthening their own authority. As a bottom line, José Alvarez notes, ‘[n]either the WTO’s admirers nor its detractors within the environmental community can deny that the Shrimp/Turtle Appellate Body has given a whole new layer of meaning to the bare text of article XX of the GATT.’219 Of course this meaning is subject to continuous contestation.
3. Proportionality, interpretation, and legitimacy
Arguably, the new layer of meaning with which the practice of interpretation has now coated the text of Art. XX has come to demand that policies pursuing legitimate non-trade objectives be proportionate (a.). The Appellate Body does indeed seem to have further increased its powers by claiming that it needs to balance competing interests in order to assess whether a measure can be justified on the basis of general exceptions. What this balancing actually entails and whether it demands a fully-fledged proportionality test is a hotly disputed issue (b.). It is most striking that, with the advancement of the theme of proportionality, the discourse on Art. XX on the whole turned into a discourse about what WTO adjudicators can legitimately do. This question involves, above all, considerations about their role in a system of multilevel governance (c.).
In United States—Gasoline and United States—Shrimp the Appellate Body saw its task with regard to the chapeau of Art. XX to lie in examining whether measures were ‘applied reasonably, with due regard both to the legal duties of the party (p.181) claiming the exception and the legal rights of the other parties concerned’.220 In the latter report it specified that
[t]he 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.’221
Here the report quotes Bin Cheng who elaborated that ‘[a] reasonable and bona fide exercise of a right…is one which is appropriate and necessary for the purpose of the right’.222 The Appellate Body immediately went on to state that
[t]he 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…. 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.223
Even though the report links its reasoning to the principle of good faith and the doctrine of abuse of rights, its language closely resembles a description of what would be required in the application of the principle of proportionality.224 In light of the Appellate Body’s pioneering treatment of the chapeau some commentators at the time saw the advent of proportionality in international trade law. Be it in praise or dismay, they stressed that proportionality analysis would now provide the standard for WTO adjudicators when assessing justifications.225
(p.182) Sure enough, proportionality analysis in law is used in distinct ways and thus comes with different meanings. A shared focus of its uses might lie in its reference to a balance to be struck between competing rights or interests. It may be well thought of as an analytical structure for striking such balance.226 Its origin could well be traced back to practices in the German legal system where it over time gained a considerable degree of sophistication in court jurisprudence, legal doctrine, and legal theory.227 Interestingly, the German Basic Law does not spell out the principle of proportionality explicitly but the Federal Constitutional Court has shaped it as an unwritten constitutional principle in its practice with reference to the concepts of the Rechtsstaat and fundamental rights.228 According to the jurisprudence of the court, the principle of proportionality demands four steps in the legal evaluation of a certain measure: first, the measure must pursue a legitimate aim (legitimer Zweck); second, it must be suitable or effective (geeignet) for the achievement of the stated objective; third, it must be necessary (erforderlich), which means that no less restrictive or less intrusive alternative is available; fourth, it must be appropriate (angemessen) for the achievement of the aim. This last element, also termed proportionality stricto sensu,229 demands a weighing and balancing of competing interests with the possible result that a measure may be found illegal because it imposes an undue disadvantage even if no alternative was available that could achieve the stated objective to the same extent.230
The four-pronged proportionality analysis may be considered one of the major contributions of German legal thinking to European law. The jurisprudence of the ECJ established proportionality as a general principle of European law in the 1970s and has frequently applied it since with a meaning very much in line with its use in the German legal system.231 Proportionality also made its way into European (p.183) human rights law by way of the jurisprudence of the ECtHR. The court has for example interpreted the qualification that restrictions placed on Arts 8–11 ECHR must be ‘necessary in a democratic society’ to mean that the ‘measure employed must be proportionate to the legitimate aim pursued’.232 With slightly different features, the principle also appears prominently in the laws of armed conflict233 and in the right to self-defence.234 Note also that with regard to countermeasures, Art. 51 ILC Draft Articles on State Responsibility stipulates a general rule of proportionality: ‘Countermeasures must be commensurate with the injury suffered, taking into account the gravity of the internationally wrongful act and the rights in question.’235
In view of this summary sketch of proportionality’s track record it might not be surprising if it also found its way into international trade law. Treaty provisions and jurisprudence have been read in this light and sure enough, in United States—Cotton Yarn, proportionality did make its first appearance in the context of the WTO. In this case dealing with transitional safeguard remedies against certain imports under the Agreement on Textiles and Clothing (ATC), the Appellate Body read the conditions for attributing damages under Art. 6(4) ATC as an expression of the principle of proportionality and found support for its interpretation in the general international law on countermeasures.236 It also tied its reasoning to Art. 22(4) DSU providing that ‘the suspension of concessions or other obligations authorized by the DSB shall be equivalent to the level of the nullification or impairment’, thus suggesting that the principle of proportionality generally informs the law of countermeasures within the WTO.237 The Agreement on Subsidies and Countervailing Measures (SCM Agreement) provides further support and guidance for this (p.184) position. But neither Art. 4(10) SCM Agreement, taken in support of proportionality analysis, nor the Agreement generally state the objective of countermeasures, thus leaving considerable discretion to the adjudicators on how to actually apply the test.238 Even if its contours remain blurred, proportionality analysis has become a common feature in the trade law on countermeasures.239
Does this also hold true for the interpretation of Art. XX?240 Has the Appellate Body introduced proportionality analysis into its analysis of general exceptions? This remains thoroughly debated by all actors involved. The material for contestation on this issue and shades of contingent answers again stem from judicial practice where the Appellate Body’s report in Korea—Beef provides the main reference point.
b) The contested meaning of ‘necessary’
The Appellate Body interpreted the term ‘necessary’ for the first time in Korea—Beef and its interpretation has provided contestants with ample ammunition to buttress their divergent claims ever since. The AB got off to a surprising start when it stressed that its task was to apply the ordinary meaning of the term and for that purpose turned to two standard dictionaries.241 This is not only surprising because the meaning of ‘necessary’ had been thoroughly disputed by the parties who would then hardly be convinced by the authority of a dictionary with regard to the question of what ‘necessary’ really means. It is also surprising because the Appellate Body immediately afterwards rejected the definitions it had found in the dictionaries and came up with its own shot at the meaning. In its view, measures are necessary when they indispensable. But also measures which are not wholly indispensable may still be necessary.242 Little if anything was gained by such a start. The Appellate Body went on to state in a key passage that
a treaty interpreter assessing a measure claimed to be necessary to secure compliance of a WTO-consistent law or regulation may, in appropriate cases, take into account the relative importance of the common interests or values that the law or regulation to be enforced is intended to protect. The more vital or important those common interests or values are, the (p.185) easier it would be to accept as ‘necessary’ a measure designed as an enforcement instrument.243
In sum, determination of whether a measure, which is not ‘indispensable’, may nevertheless be ‘necessary’ within the contemplation of Article XX(d), involves in every case a process of weighing and balancing a series of factors which prominently include the contribution made by the compliance measure to the enforcement of the law or regulation at issue, the importance of the common interests or values protected by that law or regulation, and the accompanying impact of the law or regulation on imports or exports.244
The AB then candidly asserted that this interpretation is supported by the United States—Section 337 precedent. It maintained that its demand for a process of weighing and balancing corresponds to the well-established qualification that an alternative measure be ‘reasonably available’.245 This is surely a far stretch and a bold claim. If nothing else it testifies to the Appellate Body’s endeavour to connect its actions to precedents and to thus instantiate new meanings within discursive structures.
Korea had argued on appeal that the panel erred in introducing a consistency requirement into Art. XX, i.e. that a member must pursue a certain level of protection consistently. The Appellate Body found that consistency is indeed no requirement of Art. XX. Nor had the panel actually argued this, according to the AB. ‘It is not open to doubt,’ the Appellate Body continued, ‘that Members of the WTO have the right to determine for themselves the level of enforcement of their WTO-consistent laws and regulations.’246 It then went on to deal with the question of whether Korea could have reasonably been expected to employ an alternative measure ‘to achieve the same result’.247 It concurred with the panel that Korea’s measures were ‘a disproportionate measure not necessary to secure compliance with the Korean law against deceptive practices’.248 In a final step, it pointed to the administrative costs that alternatives might imply and found that these would not be extraordinary. The Appellate Body thus concluded that a less trade restrictive measure was reasonably available and Korea’s measures were thus not necessary in the sense of Art. XX(d).
Any further elaboration on the Appellate Body’s reasoning is doomed to be imbued by one interpretation or another of what the Appellate Body actually did. This also holds true when discussing what the Appellate Body itself did with its reasoning in later cases. Has Korea—Beef introduced a fully-fledged proportionality analysis into the concept of necessity where it appears in Art. XX? Does Art. XX require that benefits achieved for a legitimate public policy aim are proportionate to the costs in terms of trade restrictions? Opinions diverge. One observation that could hardly be refuted is that there would be a manifest tension between the (p.186) requirements of a proportionality analysis and the categorical statement that members are free to choose their own level of protection. In contrast to a test demanding that the measure be least trade restrictive, a fully fledged proportionality analysis would demand in a fourth step that the measure be appropriate (angemessen); that is, the measure’s costs in trade restrictions must not be excessive to the benefits for the public policy aim. A measure might then be found unjustifiable even if there was no alternative to meet the member’s level of protection. In other words, the interest of trade liberalization (the interest of other members in marked access) might outweigh another member’s interest in health protection, for instance.249 It is certainly hard to see how this would not stand in tension to the credo that a member state is free to choose its own level of protection.
In its immediate follow-up to Korea—Beef, the Appellate Body had to deal with a complaint by Canada against France’s import ban on asbestos. Throughout the report in EC—Asbestos, it stressed the importance of health protection. It did so first in its remarkable finding that asbestos and the French substitute, cellulose and glass fibres, were unlike products.250 This would have resolved the issue of legality. Only if a measure is discriminatory and therefore in prima facie violation of the GATT would it be in need of justification by way of Art. XX. The Appellate Body went on, however, to engage in an analysis of the general exceptions and extended its interpretation of ‘necessity’ to subparagraph (b). It reiterated the central passages of Korea—Beef, reproducing the tension between the observation that the more vital or important the public policy aims are the easier it would be to accept as ‘necessary’ a measure designed to achieve those ends, on the one hand, and the credo that the decisive question is whether there is an alternative measure that would achieve the same end and that is less restrictive of trade, on the other hand.251 In EC—Asbestos the Appellate Body found that no other alternative could have met France’s concern to the same extent thus making this case the first in which a member could have succeeded in justifying a policy by way of general exceptions. This finding was however not compelled by the case because the measure had already been found to be consistent with Art. III(4) and was therefore not even in need of justification. But with its pronouncements on Art. XX the AB did line up all the arguments in order to eventually find a measure to be justified by way of Art. XX.252 This is the same pattern it had employed before in the United States—Shrimp saga in which previous dicta ultimately came to carry its decision.
(p.187) In subsequent adjudicatory practice with regard to the term ‘necessary’ in Art. XX GATT, the Appellate Body has continued to reiterate its balancing test of Korea—Beef as well as the assertion that it is beyond doubt that members are free to choose their level of protection.253 It was careful, however, not to include in its recital that an interpreter needs to ‘take into account the relative importance of the common interests or values that the law or regulation to be enforced is intended to protect’.254 In Brazil—Retreaded Tyres the EC had again strongly pushed for an outright proportionality test.255 Also the Appellate Body was remarkably emphatic about the need to balance the importance of competing interests. It further fuelled controversy by coalescing a proportionality analysis with the requirement that the measure be least trade restrictive:
[I]n order to determine whether a measure is ‘necessary’ within the meaning of Article XX(b) of the GATT 1994, a panel must consider the relevant factors, particularly the importance of the interests or values at stake, the extent of the contribution to the achievement of the measure's objective, and its trade restrictiveness. If this analysis yields a preliminary conclusion that the measure is necessary, this result must be confirmed by comparing the measure with possible alternatives, which may be less trade restrictive while providing an equivalent contribution to the achievement of the objective. This comparison should be carried out in the light of the importance of the interests or values at stake. It is through this process that a panel determines whether a measure is necessary.256
It remains dubious whether the Appellate Body really means what it says or does what it says, i.e. whether it requires that measures under Art. XX can only be ‘necessary’ if they meet a fully-fledged proportionality test and whether it actually tests measures under this standard.257 A range of different claims about what the (p.188) Appellate Body says or does and about what ‘necessary’ means are competing in legal discourse centred on its case-law. In scholarship this dispute explicitly extends to political and legal philosophy: the dispute about what ‘necessary’ means is largely carried out on the basis of whether adjudicators should engage in proportionality analysis.
c) Interpretation and legitimacy
The Appellate Body’s words and deeds lend themselves to a wide spectrum of interpretations. Some argue that it has already engaged in proportionality analysis, others say it has not. Those who argue it has done so also believe that it should do so and those who say that it has not done so also argue that it should not do so—on both accounts the Appellate Body was right in what it did. More likely, however, the normative idea precedes the analysis of actual practice.258 The issue appears to divide the community of scholarly commentators. One group claims that the Appellate Body balances the benefits of a certain measure for the achievement of a certain legitimate public policy goal against the cost of that measure in terms of reduced trade. Some had already sketched this path under the impact of the GATT decision in Tuna—Dolphin I,259 others saw the advent of proportionality in the Appellate Body’s first steps in United States—Gasoline and United States—Shrimp,260 and finally the decision in Korea—Beef appeared to establish a straightforward test of appropriateness between measures aimed at public policy concerns and trade objectives.261 Those who see a proportionality test at work also argue that the adjudicatory bodies within the WTO are right to examine a measure’s appropriateness.
(p.189) A number of complementary reasons are offered in support of this suggestion. In a rational-choice perspective, balancing might be considered part of the task delegated to the courts (the agent) by the members (the principals).262 A strong thread of constitutional doctrine and legal theory also holds balancing to be a quite natural dimension of legal reasoning and there is no apparent reason why this should be different in the context of the WTO. Authors tend to stress the rationalizing and constraining function that proportionality analysis in their view entails.263 Balancing then tends to be linked to the constitutional qualities within the WTO.264 Some commentators even suggest that ‘the AB focuses on the balancing of competing rights, interests, and obligations as a pre-dominant feature within chapeau analysis’.265 Also the WTO secretariat found in 2002 that ‘[i]t may be possible to say that there has been some evolution in the interpretation of the necessity requirement of Article XX(b) and (d). It has evolved from a least-trade restrictive approach to a less-trade restrictive one, supplemented with a proportionality test (“a process of weighing and balancing a series of factors”).’266 And the WTO’s World Trade Report of 2005 embraces the jurisprudence on balancing in support of trade law’s openness for non-trade public policy considerations—a good thing after all.267
In contrast, another group claims that the Appellate Body’s rhetoric on balancing is misleading and it should not be taken to imply a proportionality test as it is known from domestic or European law.268 They maintain that the Appellate Body respects, as it says it does, the regulative autonomy of its members and members’ right to freely choose their level of protection. It does engage in a balancing exercise, but this balancing does not extend to the benefits of the measure for legitimate (p.190) public policy aims. This would inevitably contradict a member’s right to freely choose its level of protection. Balancing is part of examining whether an alternative measure is reasonably available that would be less trade restrictive and yet would meet the same level of protection.269 Such an alternative measure might be more costly and this is where the Appellate Body engages in balancing the additional administrative or enforcement costs against the benefits in lesser trade restrictions. Such an analysis leaves the public policy interests of a measure untouched. Neither should the Appellate Body engage in examining the appropriateness of measures, such scholars argue, because it lacks a number of indispensable prerequisites for doing so. Above all, judicial interpretation is not embedded in a functionally equivalent institutional context when compared to domestic or European arenas.270
D. Conclusions: Adjudication, precedents, and legitimacy
GATT/WTO adjudicators have shaped and developed Art. XX GATT in their interpretative practice. While at one point in time an attempt at justifying trade restrictions by way of general exceptions was unlikely to succeed because of an exceedingly high threshold and because of the understanding that there was something like a territorial limitation built into Art. XX, such an attempt now faces fewer obstacles. GATT panels of the 1980s and 1990s coated the norm text with their interpretations and also established that a measure, in order to be justifiable, had to be least trade restrictive among reasonably available alternatives. This was the settled interpretation of measures that according to Art. XX need to be ‘related to’ or ‘necessary’ for the achievement of a legitimate policy objective. Jurisprudence had created a high threshold that was very difficult to meet. Hypothetical alternatives, if only they were less trade restrictive, sufficed to render a measure unjustified. Panels erected another barrier against what the insider network of trade experts perceived to be a threat to the multilateral trading system emanating from the challenge of policies aiming at non-trade objectives by claiming that there is territorial limitation for measures that could in principle be justified under Art. XX. Arguing with a palpable sense of existentialist angst, they feared that the multilateral trade regime would ultimately collapse if member states were able to condition market entry on process and production methods.
Now, under the tutelage of the Appellate Body, a two-tiered test prevails according to which a measure first has to come under one of the paragraphs, and, second, has to be implemented in a manner that does not violate the chapeau of (p.191) Art. XX; above all, it must not constitute ‘arbitrary or unjustifiable discrimination’ or constitute a ‘disguised restriction on international trade’. It is now also safe to say that Art. XX does not limit legitimate objectives to policy goals that stay within the jurisdiction of individual states. Such significant developments in trade law have come about by way of interpretation. The practice of interpretation has made Art. XX. Uncertainties remain.
Legal argument now centres on questions of balancing, on what balancing and proportionality actually mean, and on how they relate to the regulatory autonomy of the contracting parties. The reference point in legal discourse is the Appellate Body’s pronouncement that determining whether a measure is necessary ‘involves in every case a process of weighing and balancing a series of factors which prominently include the contribution made by the compliance measure to the enforcement of the law or regulation at issue, the importance of the common interests or values protected by that law or regulation, and the accompanying impact of the law or regulation on imports or exports’.271 What does it mean, for instance, that adjudicators should, or even must, take into account the importance of the values or interests of a policy?
Critical changes in the law have gone hand in hand with changes in the institutional setup of adjudication. The creation of the WTO with its DSU and the possibility of appellate review were of course most significant and consequential. In its first decisive steps, the new Appellate Body redirected processes of semantic change. It broke down, at least in part, the high barriers that GATT jurisprudence had erected against threats from the outside non-trade law world and placed its reasoning within the broader context of the international legal order. It critically contributed to a shift from political dispute resolution that followed the logics of diplomacy towards a legal mode of adjudication.
The task of negotiating how commitments to liberalized trade relate to non-trade public policy objectives has notably continued to fall on adjudicating bodies. While early panels played the ball to political processes, the political-legislative process has remained uninformative and unsupportive in this regard. Panels inter alia suggested that multilateral environmental standards should prevent unilateralism. They should curtail protectionism in disguise. But political negotiations have not resolved any of the key questions. The prospects of the climate change regime reinforce this view and suggest that unilateral action appears to be the only alternative. It might thus possibly again fall upon the Appellate Body to decide, for instance, whether, when, and how the competitive disadvantage which domestic producers bear because of taxes they must pay for carbon emissions, can be levelled out in relation to imported products.
The Appellate Body especially carried changes in the meaning of the GATT with the help of precedents whose force it increased itself. The power of precedents is clearly tangible while doctrine and treaty provisions strike a different tone. Even unadopted panel reports have figured prominently in subsequent legal practice. (p.192) Adjudicators frequently do engage with precedents at length and relate their arguments to previous decisions. They use previous reasoning to support their findings, highlight why the present case is different, or, where it is the same, why they differ. Arguing with precedents is a natural part of legal reasoning, just like arguing by way of analogy, for instance. After all, the expectation in law is that the same cases are treated alike.272 Theoretical approaches of quite different pedigrees agree that one of law’s principal functions is to stabilize normative expectations.273 If a case is decided differently from a similar previous one, then this has to be explained. It is interesting to note that disputing parties do not usually counter a precedent invoked by the adversary by arguing that it is not binding, but by distinguishing it or by giving it a different spin in semantic struggles. Participants in legal discourse are forced to relate to precedents in order to succeed and they are expected to do so. The power of precedents lies at the core of international judicial institutions’ semantic authority.
In addition to this general working of precedents, GATT/WTO adjudicators have explicitly strengthened the impact of their reports on subsequent legal practice. At an early stage, it may be recalled, the Appellate Body clarified that precedents, ‘create legitimate expectations among WTO Members, and, therefore, should be taken into account where they are relevant to any dispute’.274 And on another occasion it expressed its deep concern ‘about the Panel’s decision to depart from well-established Appellate Body jurisprudence clarifying the interpretation of the same legal issues’. It continued to threaten that, if future panels failed to follow suit, this might amount to a failure of its obligation to objectively assess the matter before it.275 Under the impact of such high esteem for judicial decisions, actors in legal discourse cannot escape the force of precedents and have to engage with them in making their claims. Precedents redistribute argumentative burdens and heavily bear on an interpretation’s chances of succeeding. This is common knowledge among the actors and explains the interest in the proceedings and the reasoning that adjudicators employ. Even if the outcome of a report might be shared, members still scrutinize and possibly challenge the reasoning in political bodies or on appeal because it feeds into later practice.276 As happened in both Japan—Alcoholic Beverages (II) and EC—Asbestos, parties might appeal even if they had won the (p.193) case at first instance in all practical matters, precisely because they do not want to let a bad precedent stand.277
Such concern is not without reason. It is interesting to note that a number of decisive steps in the Appellate Body’s development of the law have first been paved in dicta. It has made general statements that were not decisive to later build on its general pronouncements in decisive steps. This was the case in overturning what had come under the heading of a ‘territorial limitation’ in Art. XX. In United States—Shrimp the AB said that it does not share the view according to which a measure seeking to protect shared natural resources outside the jurisdiction of a member state (‘extraterritorially’, so to speak) renders the measure categorically unjustifiable. This had, however, been the interpretation used by GATT panels and was a position that many actors endorsed. The AB gave its opinion but eased opposition by saying that this was not decisive in the present case. It spoke and said that it remained silent. It would ‘not pass upon the question of whether there is an implied jurisdictional limitation in Article XX(g), and if so, the nature or extent of that limitation’.278 In the subsequent proceedings relating to the request for surveillance according to Art. 21(5) DSU, however, the AB then found that its pronouncement on the issue was not a mere dictum but the expression of a principle that carried its decision.
Again in EC—Asbestos it was not strictly necessary for the Appellate Body to discuss the justification of the import ban on products containing asbestos. And yet it developed a whole line of reasoning that could later be employed in support of a finding of (il)legality. One may also wonder in this regard about (and be wary of) the constant reiteration that adjudicators should, or must, take into consideration the importance of the value pursued in the process of balancing that is required for determining whether a measure is necessary. So far the AB has never said that the objective a member pursues is unimportant—but the arguments are out there and might, at one point in time, support the finding that a measure is not necessary because the trade restrictions are not proportionate to the importance of the goal pursued.
It has been suggested with good reasons that this should not happen. Adjudicators, many argue, do not have the authority to engage in a fully-fledged proportionality test, encroaching upon member state regulatory autonomy and contradicting the credo that members are free to choose their own level of protection. The balancing that might indeed be required does not extend to the importance of the goal, but rather to the costs of alternatives that are no less suited to meet the same level of protection. To the contrary, it could be argued that there is nothing odd about a fully-fledged proportionality test. Some even suggest that it is an expression of the constitutional quality of the WTO legal system.
(p.194) So far, it seems that in fact WTO adjudicators have not actually gone as far as to explicitly throw the importance of the goal itself into the process of balancing. They have rather allowed for more leeway on the part of member states by taking into consideration the cost of alternative measures that would be less trade restrictive.279 It is remarkable in any event that the semantic struggle about what ‘necessary’ means has turned into a discourse about what adjudicators can legitimately do.280 The search for meaning has come to be centred on questions of legitimacy in a system of multilevel governance.
In a summary overview it first of all merits emphasis that the spell of precedents in international trade law is neither all curse nor all cure. While it might distance the law from the reach of political legislation, a body of case-law aims at coherence and serves the imperatives of legal certainty and stability. The stabilization of legitimate expectations is a central function of law and judicial practice needs to be embedded in the past in order to instruct the future.
Second, the asymmetry between judicial lawmaking and politico-legislative processes is one of the decisive elements in the debate surrounding what adjudicators in the WTO can and cannot legitimately do. One way of taking away some of the legitimatory weight that international adjudicators need to shoulder in the WTO might lie in a strategy of reviewing the process that has led to a regulatory decision and to strengthen procedural elements in this process rather than to add to the substance of Art. XX. To illustrate the point: when trade measures are the result of a decision-making process that meets certain criteria, when it includes meaningful participation and reason-giving, then it might be presumed to be justified.281 A complementary strategy would look at avenues of politicization that contribute to the creation and better use of fora in which judicial lawmaking may be politically embedded.282
Lastly, a particularly intricate issue concerns the repercussions of fragmentation. The isolation of trade law from non-trade objectives reached its problematic peak at the end of the GATT era with the Tuna—Dolphin cases. The Appellate Body has since done a lot to overcome this isolation and to open up to competing perspectives.283 Apart from the extensive quarrels in terms of judicial methodology and possible confines placed on adjudicators by positive trade law, political considera (p.195) tions about the wisdom and likely effects of the further introduction of non-trade objectives like environmental or human rights protection into the WTO system and adjudication persist and need to be explored in further detail.
There are many other elements to the legitimacy debate that are pertinent and that would need to be taken into account: considerations of due process, the use of amicus curiae briefs, and also more substantive considerations of what good has actually come out of judicial lawmaking, to name just a few. The point is that large parts of the legal dispute concerning what Art. XX means in its central elements can hardly be decoupled from considerations of legitimacy. The practice of the legal discourse testifies to how semantic struggles extend to debates about the legitimacy of international adjudication. The reign of the Appellate Body over general exceptions should be understood in the context of a scheme of multilevel governance. This demands above all due regard of the repercussions that interpretations have for the purposes of international law just as much as for municipal legal orders. The following chapters turn in closer detail to the normative implications that arise in the face of international institutions’ semantic authority and in view of lawmaking by way of interpretation.
(1) R Y Jennings, ‘The Proliferation of Adjudicatory Bodies: Dangers and Possible Answers’ (1995) ASIL Bulletin 2, 2, (speaking of a ‘quiet revolution’ in international law); C P R Romano, ‘The Proliferation of International Judicial Bodies: The Pieces of the Puzzle’ (1999) 31 NYU Journal of International Law & Politics 709–51, 709, (observing that ‘the enormous expansion and transformation of the international judiciary as the single most important development of the post-Cold War age.’). I use ‘court’ in a broad way to include different kinds of judicial institutions including those that usually go by such names as ‘tribunal’ or ‘panel’. Cf. C P R Romano, ‘A Taxonomy of International Rule of Law Institutions’ (2011) 2 Journal of International Dispute Settlement 241–77.
(2) A Helmedach, Uneinheitliche Judizialisierung der internationalen Streitbeilegung: Empirische Ergebnisse, in: B Zangl (ed), Auf dem Weg zu internationaler Rechtsherrschaft? Streitbeilegung zwischen Politik und Recht (Frankfurt am Main: Campus 2009), 267–93; B Zangl, Das Entstehen internationaler Rechtstaatlichkeit?, in: S Leibfried and M Zürn (eds), Transformationen des Staates? (Frankfurt am Main: Suhrkamp 2006), 123–50; K J Alter, ‘Delegating to International Courts: Self-Binding vs. Other-Binding Delegation’ (2008) 38 Law and Contemporary Problems 37–76. From a more legal perspective see Romano, ‘Proliferation of International Judicial Bodies’; J E Alvarez, ‘The New Dispute Settlers: (Half) Truths and Consequences’ (2003) 38 Texas International Law Journal 405–44; T Treves, Judicial Lawmaking in an Era of ‘Proliferation’ of International Courts and Tribunals: Development or Fragmentation of International Law?, in: R Wolfrum and V Röben (eds), Developments of International Law in Treaty Making (Berlin: Springer 2005), 587–620; K Oellers-Frahm, ‘Multiplication of International Courts and Tribunals and Conflicting Jurisdiction: Problems and possible solutions’ (2001) 5 Max Planck Yearbook of United Nations Law 67–104.
(3) Y Shany, ‘No Longer a Weak Department of Power? Reflections on the Emergence of a New International Judiciary’ (2009) 20 European Journal of International Law 73–91.
(4) See A v Bogdandy and I Venzke (eds), ‘Beyond Dispute: International Judicial Institutions as Lawmakers’ Special Issue (2011) 12 German Law Journal 979–1370.
(5) J H Jackson, Sovereignty, the WTO and Changing Fundamentals of International Law (Cambridge: Cambridge University Press 2006), 82.
(6) Working Party Report, The Australian Subsidy on Ammonium Sulphate, GATT/CP.4/39, adopted 3 April 1950, BISD II/188; GATT Panel Report, Treatment by Germany of Imports of Sardines, G/26, adopted 31 October 1952, BISD 1S/53.
(7) GATT Panel Report, Uruguayan Recourse to Article XXIII, L/1923, adopted 16 November 1962, BISD 11S/95.
(8) Jackson, Changing Fundamentals, 143 (also noting that ‘[t]he Oil Fee case may perhaps be a high-water mark in this regard, since it arguably reverses the treaty language’). See GATT Panel Report, United States—Taxes on Petroleum and Certain Imported Substances, L/6175, adopted 17 June 1987, BISD 34S/136 (known as the Oil Fee or as the Superfund case). Cf. A Davies, ‘The DSU Artilce 3.8 Presumption That an Infringement Constitutes a Prima Facie Case of Nullification or Impairment: When Does it Operate and Why?’ (2010) 13 Journal of International Economic Law 181–204, 186–95 (in further detail tracing the origins of the presumption that a GATT violation constitutes a nullification or impairment).
(9) A v Bogdandy and I Venzke, ‘Beyond Dispute: International Judicial Institutions as Lawmakers’ (2011) 12 German Law Journal 979–1004. Cf. F Salerno (ed), Il ruolo del giudice internazionale nell’evoluzione del diritto internazionale e comunitario (Padova: Cedam 1995).
(10) M Kuhli and K Günther, ‘Judicial Lawmaking, Discourse Theory, and the ICTY on Belligerent Reprisals’ (2011) 12 German Law Journal 1261–78; M Swart, ‘Judicial Lawmaking at the Ad Hoc Tribunals: the Creative Use of the Sources of International Law and “Adventurous Interpretation”’ (2010) 70 Zeitschrift für ausländisches öffentliches Recht und Völkerrecht 459–86; A M Danner, ‘When Courts Make Law: How the International Criminal Tribunals Recast the Laws of War’ (2006) 59 Vanderbilt Law Review 1–65; C Greenwood, ‘The Development of International Humanitarian Law by the International Criminal Tribunal for the Former Yugoslavia’ (1998) 2 Max Planck Yearbook of United Nations Law 97–140.
(11) S W Schill, ‘System-Building in Investment Treaty Arbitration and Lawmaking’ (2011) 12 German Law Journal 1083–110.
(12) R Bernhardt, Rechtsfortbildung durch den Europäischen Gerichtshof für Menschenrechte, in: S Breitenmoser and L Wildhaber (eds), Human Rights, Democracy and the Rule of Law. Liber amicorum Luzius Wildhaber (Zürich and St. Gallen: Dike 2007), 91–101; G Malinverni, Il ruolo della Corte di Strasburgo nell’evoluzione della Convenzione europea di diritti dell’uomo, in: F Salerno (ed), Il ruolo del giudice internazionale nell’evoluzione del diritto internazionale e communitario (Padova: Cedam 1995), 125–42; M Fyrnys, ‘Expanding Competences by Judicial Lawmaking: The Pilot Judgment Procedure of the European Court of Human Rights’ (2011) 12 German Law Journal 1231–60.
(13) C Binder, ‘Towards a Latin American Constitutional Court? The Jurisprudence of the Inter-American Court of Human Rights with special Focus on Amnesties’ (2010) 12 German Law Journal 1203–29.
(14) M Koskenniemi and P Leino, ‘Fragmentation of International Law? Postmodern Anxieties’ (2002) 15 Leiden Journal of International Law 553–79. Cf. R G Teitel and R Howse, ‘Cross-Judging: Tribunalization in a fragmented but interconnected global order’ (2009) 41 NYU Journal of International Law & Politics 959–90.
(15) R Dolzer and C Schreuer, Principles of International Investment Law (Oxford: Oxford Universtiy Press 2008), 18–19.
(16) The necessity defense may serve as a case in point, see W Burke-White, ‘The Argentine Financial Crisis: State Liability Under BITs and the Legitimacy of the ICSID System’ (2008) 3 Asian Journal of WTO & International Health Law and Policy 199–234; S W Schill, ‘International Investment Law and the Host State’s Power to Handle Economic Crises. Comment on the ICSID decision in LG& E v. Argentina’ (2007) 24 Journal of International Arbitration 265–86.
(17) In this section, I draw on A v Bogdandy and I Venzke, ‘In Whose Name? An Investigation of International Courts’ Public Authority and its Democratic Justification’ (2012) 23 European Journal of International Law 7–41.
(18) Self-understandings are seldom made explicit but are all the same nested in judicial hermeneutics and reasoning. Among the more outspoken instances, consider by way of example Saipem S.p.A. v The People’s Republic of Bangladesh, ICSID Case No ARB/05/7, Award, 30 June 2009, paras 89–90.
(19) H Wehberg, Das Problem eines internationalen Staatengerichtshofes (München: Duncker & Humblot 1912), 11 (‘Mehr Fortbildung des Völkerrechts durch internationale Entscheidungen!’).
(20) H Wehberg, Die internationale Friedensbewegung, Staatsbürgerbibliothek Heft 22, (Mönchengladbach: Volksvereins-Verlag 1911); H Lammasch, Die Lehre von der Schiedsgerichtsbarkeit in ihrem ganzen Umfange, in: F Stier-Somlo (ed), Handbuch des Völkerrechts, vol 5 (Stuttgart: Kohlhammer 1914), 36–7.
(21) Institut de Droit International, ‘Projet de règlement pour la procédure arbitrale internationale’, Session de La Haye, 1875, available at 〈http://www.idi-iil.org/idiF/resolutionsF/1875_haye_01_fr.pdf〉.
(22) Quoted in C Denfeld, Hans Wehberg (1885–1962). Die Organisation der Staatengemeinschaft (Baden-Baden: Nomos 2008), 115.
(23) A H Fried, Handbuch der Friedensbewegung (Wien: Verlag der Österreichischen Friedensgesellschaft 1905), 262–5; R P Anand, International Courts and Contemporary Conflicts (New York: Asia Publishing House 1974), 27; J H Ralston, International Arbitration from Athens to Locarno, (Stanford, CA: Stanford University Press 1929), 140.
(24) Fried, Friedensbewegung, 163; J B Scott, The Hague Peace Conferences of 1899 and 1907 (Baltimore: Johns Hopkins 1909), 736–7.
(25) D D Caron, ‘War and International Adjudication: Reflections on the 1899 Peace Conference’ (2000) 94 American Journal of International Law 4–30; Anand, International Courts, 33.
(26) P Zorn, Die beiden Haager Friedenskonferenzen von 1899 und 1907 (Stuttgart: Kohlhammer 1914); cf. C H Brower II, ‘The Functions and Limits of Arbitration and Judicial Settlement Under Private and Public International Law’ (2008) 18 Duke Journal of International and Comparative Law 259–309.
(27) H Wehberg, ‘Friedrich von Martens und die Haager Friedenskonferenzen’ (1910) 20 Zeitschrift für internationales Recht 343–57.
(28) ‘President on Peace’, New York Daily Tribune, 16 April 1907, p 4.
(29) See for instance W Schücking (ed), Das Werk vom Haag (München: Duncker & Humblot 1912); W Schücking, Die Organisation der Welt, in: W v Calker (ed), Staatsrechtliche Abhandlungen. Festgabe für Paul Laband zum 50. Jahrestage der Doktor-Promotion (Tübingen: Mohr 1908), 533–617. Also see F Bodendiek, Walther Schückings Konzeption der internationalen Ordnung. Dogmatische Strukturen und ideengeschichtliche Bedeutung (Berlin: Duncker & Humblot 2001).
(30) Wehberg, Staatengerichtshofes, 11 (‘Mehr Fortbildung des Völkerrechts durch internationale Entscheidungen!’).
(31) On the regional level it was only predated by the Central American Court of Justice that lived for ten years starting in 1908.
(32) O Spiermann, International Legal Argument in the Permanent Court of International Justice. The rise of the international judiciary (Cambridge: Cambridge University Press 2005), 14–23.
(33) J B Scott, ‘A Permanent Court of International Justice (Editorial Comment)’ (1921) 15 American Journal of International Law 53–5, 55; M Koskenniemi, The Ideology of International Adjudication and the 1907 Hague Conference, in: Y Daudet (ed), Topicality of the 1907 Hague Conference, the Second Peace Conference (Leiden: Nijhoff 2008), 127–52.
(34) N Politis, La justice internationale (Paris: Hachette 1924), 182.
(35) M O Hudson, Progress in International Organization (Littleton: Rothman 1981 ); M O Hudson, ‘The Permanent Court of International Justice—An Indispensable First Step’ (1923) 108 American Academy of Political And Social Science, Annals 188–92.
(37) Koskenniemi, Ideology of International Adjudication.
(38) Bodendiek, Walther Schückings, 117 and 179–82. With regard to the peace movement, without explicit reference to Kant but very much in his style, see Fried, Friedensbewegung, 20–2. Compare, however, Lammasch, Schiedsgerichtsbarkeit, 37 (calling the references to Kant’s project of perpetual peace ‘mere decoration’).
(39) J v Bernstorff, Der Glaube an das universale Recht. Zur Völkerrechtstheorie Hans Kelsens und seiner Schüler (Baden-Baden: Nomos 2001), 169; D Zolo, ‘Hans Kelsen: International Peace through International Law’ (1998) 9 European Journal of International Law 306–24.
(40) H Kelsen, Law and Peace in International Relations (Cambridge, MA: Harvard University Press 1942), 146–8; C Jabloner, ‘Verrechtlichung und Rechtsdynamik’ (1999) 54 Zeitschrift für öffentliches Recht 261–78.
(41) Kelsen, Law and Peace, 150.
(42) H Kelsen, ‘International Peace-By Court or Government?’ (1941) 46 The American Journal of Sociology 571–81.
(43) Kelsen, Law and Peace, 161–3.
(44) H Kelsen, ‘Compulsory Ajudication of International Disputes’ (1943) 37 American Journal of International Law 397–406.
(45) J E Alvarez, International Organizations as Law-Makers (Oxford: Oxford University Press 2005), 523.
(46) On persistent myths in the field of adjudication see in detail I Venzke, ‘The Role of International Courts as Interpreters and Developers of the Law: Working out the Jurisgenerative Practice of Interpretation’ (2012) 34 Loyola of Los Angeles International and Comparative Law Review 119–51.
(47) J Lege, Was Juristen wiklich tun. Jurisprudential Realism, in: W Brugger, U Neumann, and S Kirste (eds), Rechtsphilosophie im 21. Jahrhundert (Frankfurt am Main: Suhrkamp 2008), 207–33, 216; R Christensen and H Kudlich, Theorie richterlichen Begründens (Berlin: Duncker und Humblot 2001), 26.
(48) M Weber, Wissenschaft als Beruf (1917/19), in: H Baier (ed), Max Weber Gesamtausgabe, vol 17 (Tübingen: Mohr Siebeck 1992), 95 (‘die Jurisprudenz…stellt fest, was nach den Regeln des teils zwingend logisch, teils durch konventionell gegebene Schemata gebundenen, juristischen Denkens gilt.’). Cf. A. Somek, ‘The Indelible Science of Law’ (2009) 7 International Journal of Constitutional Law 424–41, 440.
(49) In a theoretically solid fashion, however, a defence of a deductive mode of reasoning cannot build on an elusive belief in the determinative content of abstract concepts but would instead be based on the need for justification and for providing prerequisites of meaningful critique. In other words, judicial reasoning is concerned with justifying a decision and not with finding it. On ‘the reasons for reasons’ see v Bogdandy and Venzke, ‘In Whose Name?’, 15–16. Cf. U Neumann, Theorie der juristischen Argumentation, in: W Brugger, U Neumann, and S Kirste (eds), Rechtsphilosophie im 21. Jahrhundert (Frankfurt am Main: Suhrkamp 2008), 233–60.
(50) Fisheries Jurisdiction (Great Britain and Northern Ireland v Iceland), Judgment of 25 July 1974, (1974) ICJ Reports 3, para 53.
(51) Legality of the Threat or Use of Nuclear Weapons, Advisory Opinion of 8 July 1996, ICJ Reports 226, para 18.
(52) P Bourdieu, ‘The Force of Law: Toward a Sociology of the Juridical Field’ (1987) 38 Hastings Law Journal 814–53, 820; N Luhmann, Legitimation durch Verfahren (Frankfurt am Main: Suhrkamp 1983), 16; N Luhmann, Das Recht der Gesellschaft (Frankfurt am Main: Suhrkamp 1993), 308.
(53) I Kant, Kritik der Reinen Vernunft (Frankfurt am Main: Suhrkamp 1974 ), 183–94 (A 131–48); cf. M Koskenniemi, ‘Constitutionalism as Mindset: Reflections on Kantian Themes About International Law and Globalization’ (2007) 8 Theoretical Inquiries in Law 9–36.
(54) J Habermas, Faktizität und Geltung (Frankfurt am Main: Suhrkamp 1992), 238–72; also see R Ogorek, Richterkönig oder Subsumtionsautomat? (Frankfurt am Main: Klostermann 1986) (for a detailed recollection of how this thought has been dealt with).
(56) F Müller, Richterrecht—rechtstheoretisch formuliert, in: Richterliche Rechtsfortbildung, Festschrift der Juristischen Fakultät der Universität Heidelberg (Heidelberg: 1986), 65–84, 78–9.
(57) I Scobbie, ‘Res Judicata, Precedent, and the International Court: A Preliminary Sketch’ (1999) 20 Australian Yearbook of International Law 299–318.
(58) v Bogdandy and Venzke, ‘Beyond Dispute?’.
(59) Christensen and Kudlich, Theorie richterlichen Begründens; C Kirchner, Zur konsequentialistischen Interpretationsmethode, in: T Eger, J Bigus, C Ott, and G v Wangenheim (eds), Internationalisierung des Rechts und seine ökonomische Analyse (Wiesbaden: Gabler 2008), 37–49, 39.
(60) M Jacob, ‘Precedents: Lawmaking Through International Adjudication’ (2011) 12 German Law Journal 1005–32. Cf. M Shahabuddeen, Precedent in the World Court (Cambridge: Cambridge University Press 1996), 76–83; S W Schill, The Multilateralization of International Investment Law (Cambridge: Cambridge University Press 2009), 321–61;A Höland, ‘Wie wirkt Rechtsprechung?’ (2009) 30 Zeitschrift für Rechtssoziologie 23–46 (offering an account of precedents in the German and European legal systems).
(61) See, e.g., Art. 56(1) ICJ Statute. Cf. A Ross, Theorie der Rechtsquellen (Leipzig: Deuticke 1929), 283; M Kriele, Theorie der Rechtsgewinnung. Entwickelt am Problem der Verfassungsinterpretation (Berlin: Duncker & Humblot 1976), 167–71.
(62) Habermas, Faktizität und Geltung, 516; Luhmann, Recht der Gesellschaft, 151. Cf. A v Bogdandy and I Venzke, ‘On the Democratic Legitimation of International Judicial Lawmaking’ (2011) 12 German Law Journal 1341–70, 1344–9.
(63) R Bernhardt, Article 59, in: A Zimmermann, C Tomuschat, and K Oellers-Frahm (eds), The Statute of the International Court of Justice: A Commentary (Oxford: Oxford University Press 2006), 1231–51.
(64) G Abi-Saab, Les sources du droit international: Essai de déconstruction, in: M Rama-Montaldo (ed), El derecho internacional en un mundo en transformación. Liber amicorum en homenaje al Profesor Eduardo Jiménez de Aréchaga, vol 1 (Montevideo: Fundación de Cultura Universitaria 1994), 29–49; A E Boyle and C M Chinkin, The Making of International Law (Oxford: Oxford University Press 2007), 267.
(65) Cf. R M Cover, ‘Violence and the Word’ (1986) 95 Yale Law Journal 1601–30 (submitting with a challenging and problematic drasticity that judges are murderers because they kill alternative meanings); Jacob, ‘Precedents’ (on the working of precedents more generally).
(66) Case of Readaptation of the Mavrommatis Jerusalem Concessions, Jurisdiction, 10 October 1927, PCIJ Series A, No 11, para 43. Cf. Shahabuddeen, Precedent, 16–29.
(67) Spiermann, Permanent Court of International Justice, 394.
(68) R Hudec, Enforcing International Trade Law. The Evolution of the Modern GATT Legal System (Salem, NH: Butterworth Legal Publishers 1993), 4–5; J H Jackson, The World Trade Organization: Constitution and Jurisprudence (London: Royal Institute of International Affairs 1998), 16–18; P v d Bossche, The Law and Policy of the World Trade Organization (Cambridge: Cambridge University Press 2008), 78–81. It should be noted, however, that the GATT of 1947 was modified with the Final Act of the Uruguay Round in 1994. The changes are not of concern for the present purposes.
(69) Hudec, International Trade Law, 7. In detail also see R Hudec, ‘The GATT Legal System: A Diplomat’s Jurisprudence’ (1970) 4 Journal of World Trade 615; J H Jackson, ‘The Case of the World Trade Organization’ (2008) 84 International Affairs 437–54 (speaking of a transition from negotiation or a diplomacy-oriented approach towards a rules-oriented approach).
(70) W Benedek, Die Rechtsordnung des GATT aus völkerrechtlicher Sicht (Graz: Springer 1990), 232–6; Hudec, International Trade Law, 9.
(71) M Nettesheim, ‘Von der Verhandlungsdiplomatie zur internationalen Wirtschaftsordnung: Zur Entwicklung des internationalen Wirtschaftsrechts’ (2000) 19 Jahrbuch für Neue Politische Ökonomie 48–76; J H H Weiler, ‘The Rule of Lawyers and the Ethos of Diplomats. Reflections on the Internal and External Legitimacy of WTO Dispute Settlement’ (2001) 35 Journal of World Trade 191–207; R Howse, ‘From Politics to Technocracy—and Back Again: The Fate of the Multilateral Trading Regime’ (2002) 96 American Journal of International Law 94–117.
(72) E-U Petersmann, The GATT/WTO Dispute Settlement System: International Law, International Organizations and Dispute Settlement (London: Kluwer 1997), 85.
(73) Nettesheim, ‘Verhandlungsdiplomatie’, 54–6 (treating both phenomena under the heading of institutionalization).
(75) Dispute Settlement Body, Minutes of the Meeting held on 6 November 1998, WT/DSB/M/50, p 12 (the meeting concerned the adoption of the Appellate Body Report in United States—Shrimp).
(76) In the following sections I specifically draw on I Venzke, ‘Making General Exceptions: The Spell of Precedents in Developing Art. XX into Standards for Domestic Regulatory Policy’ (2011) 12 German Law Journal 1111–40.
(77) S Charnovitz, ‘Exploring the Environmental Exceptions in GATT Article XX’ (1991) 25 Journal of World Trade 37–55, 39; B E Lowe, The International Protection of Labor (New York: Macmillan 1921), 142–4.
(79) Charnovitz, ‘Environmental Exception’, 39. An issue that has not faded, see EC—Seal Products I, DS400 & 401, panels established on 25 March and 21 April 2011 respectively.
(80) Convention for the Abolition of Import and Export Prohibitions and Restrictions, 8 November 1927, reproduced in (1931) 25 American Journal of International Law, Supplement: Official Documents, 121–45.
(81) D A Irwin, P C Mavroidis and A O Sykes, The Genesis of the GATT (Cambridge: Cambridge University Press 2008), 5.
(82) Charnovitz, ‘Environmental Exceptions’, 41, quoting League Doc C.E.I, 222, p 21.
(83) Irwin, Mavroidis, and Sykes, Genesis, 162–4; P Ala’i, ‘Free Trade or Sustainable Development? An Analysis of the WTO Appellate Body’s Shift to a More Balanced Approach to Trade Liberalization’ (1998) 14 American University International Law Review 1129–71, 1132–6.
(84) J H H Weiler, Law, Culture, and Values in the WTO—Gazing into the Crystal Ball, in: D L Bethlehem, D RcRae, R Neufeld, and I Van Damme (eds), The Oxford Handbook of International Trade Law (Oxford: Oxford University Press 2009), 749–72, 758.
(85) I have deliberately tried to leave aside the considerable jurisprudence and commentary on the well-known intricacies in determining ‘likeness’ as much as the subject permits.
(86) Weiler, Crystal Ball, 758.
(88) For illustrative and illuminating contributions in the plethora of scholarly literature on the issue of ‘likeness’ in this regard see D K Tarullo, ‘Logic, Myth, and the International Economic Order’ (1985) 26 Harvard International Law Journal 533–52; R Howse and D Regan, ‘The Product/Process Distinction—An Illusory Basis for Disciplining “Unilateralism” in Trade Policy’ (2000) 11 European Journal of International Law 249–89; H Horn and J H H Weiler, ‘EC–Asbestos European Communities—Measures Affecting Asbestos and Asbestos-Containing Products’ (2004) 3 World Trade Review 129–51.
(89) It is easy to see that this could not be otherwise because then a contracting party could transform a tax measure into internal regulations in order to come under a more lenient standard, Appellate Body Report, European Communities—Measures Affecting Asbestos and Products Containing Asbestos, WT/DS135/AB/R, 12 March 2001, para 99.
(90) GATT Panel Report, United States—Taxes on Petroleum and Certain Imported Substances, L/6175, adopted 17 June 1987, BISD 34S/136, para 5.1.9; GATT Panel Report, United States—Measures Affecting Alcoholic and Malt Beverages, DS23/R, adopted 19 June 1992, BISD 39S/206, para 5.74. See the seminal piece by R Hudec, ‘GATT/WTO Constraints on National Regulation. Requiem for an “Aim and Effects” Test’ (1998) 32 International Lawyer 619–49.
(91) Appellate Body Report, Japan—Taxes on Alcoholic Beverages, WT/DS8, 10 & 11/AB/R, 4 October 1996, pp 18–19; cf. H Horn and P C Mavroidis, ‘Still Hazy after All These Years: The Interpretation of National Treatment in the GATT/WTO Case-law on Tax Discrimination’ (2004) 15 European Journal of International Law 39–69.
(92) Appellate Body Report, European Communities—Measures Affecting Asbestos and Products Containing Asbestos, WT/DS135/AB/R, 12 March 2001, para 172.
(93) Ibid., at, para 130. In this report the Appellate Body also noted that determination of likeness needs to take place on a case-by-case basis thus leaving ample room for manoeuvre (at paras 101–102); cf. Appellate Body Report, Japan—Taxes on Alcoholic Beverages, WT/DS8, 10 & 11/AB/R, 4 October 1996, p 21.
(94) GATT Panel Report, United States—Restrictions on Imports of Tuna, DS21/R, 3 September 1991, unadopted, BISD 39S/155, para 5.11 (italics added).
(95) United States—Restrictions on Imports of Tuna, DS29/R, 16 June 1994, unadopted, para 5.8; S Charnovitz, ‘The Law of Environmental “PPMs” in the WTO: Debunking the Myth of Illegality’ (2002) 27 Yale Journal of International Law 59–110; Howse and Regan, ‘Product/Process Distinction’.
(96) Weiler, Crystal Ball,766–72.
(97) WTO-UNEP Report, Trade and Climate Change (2009), 107.
(98) Appellate Body Report, Japan—Alcoholic Beverages II, WT/DS8, 10 & 11/AB/R, pp 4–6.
(102) Horn and Mavroidis, ‘Still Hazy’, also see Panel Report, Mexico—Taxes on Soft Drinks, WT/DS308/R, 7 October 2005, para 8.91 (noting that ‘the declared intention of legislators and regulators of a Member adopting the measure should not be totally disregarded’).
(103) Appellate Body Report, Japan—Alcoholic Beverages II, WT/DS8, 10 & 11/AB/R, pp 30–1.
(104) J G Ruggie, ‘International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order’ (1982) 36 International Organization 379–415. Also see his seminal J G Ruggie, ‘International Responses to Technology: Concepts and Trends’ (1975) 29 International Organization 557–83.
(105) Weiler, ‘Rule of Lawyers’, 194–5; Howse, ‘Politics/Technocracy’, 99.
(106) Howse, ‘Politics/Technocracy’, 99.
(107) Hudec, International Trade Law; D Bodansky and J C Lawrence, Trade and Environment, in: D L Bethlehem, D McRae, R Neufeld, and I Van Damme (eds), The Oxford Handbook of International Trade Law (Oxford: Oxford University Press 2009), 505–38, 508–13.
(108) Howse, ‘Politics/Technocracy’, 108.
(109) GATT Panel Report, United States—Prohibition of Imports of Tuna and Tuna Products from Canada, L/5198, adopted 22 February 1982, BISD 29S/91.
(116) GATT Panel Report, Canada—Measures Affecting Exports of Unprocessed Herring and Salmon, L/6268, adopted 22 March 1988, BISD 35S/98. Canada also argued that the measure did not amount to a violation because of the exceptions provided for in XI:2(b) GATT. This was clearly to no avail. Ibid., at paras 4.2–4.3.
(123) See Charnovitz, ‘Environmental Exceptions’, 50–1; M J Trebilcock and R Howse, The Regulation of International Trade (London: Routledge 2005), 516–18.
(124) In the Matter of Canada’s Landing Requirement for Pacific Coast Salmon and Herring, Final Report, 16 October 1989.
(128) Panel Report, United States—Gasoline, WT/DS2/R, 29 January 1996, para 6.40.
(129) Appellate Body Report, United States—Gasoline, WT/DS2/AB/R, 29 April 1996, p 16.
(130) A Stone Sweet and J Mathews, ‘Proportionality Balancing and Global Constitutionalism’ (2008) 47 Columbia Journal of Transnational Law 73–165, 157–9.
(131) GATT Panel Report, United States Section 337 of the Tariff Act of 1930, L/6439, adopted 7 November 1989, BISD 36S/345, para 3.60.
(134) GATT Panel Report, Thailand—Restrictions on Importation of and Internal Taxes on Cigarettes, DS10/R, adopted 7 November 1990, BISD 37S/200, at para 75.
(138) Cf. D C Esty, Greening the GATT. Trade, environment, and the future (Washington, DC: Institute for International Economics 1994); Ala’i, ‘Free Trade or Sustainable Development?’, 1137 (noting that ‘the traditional analysis of the provisions of Article XX by the GATT panels made [the burden of proof on the party invoking an Article XX exception] a difficult, if not impossible, burden to meet.’).
(139) GATT Panel Report, United States—Restrictions on Imports of Tuna, DS21/R, 3 September 1991, unadopted, BISD 39S/155.
(140) One issue that has to be sidestepped here but which is of crucial significance generally is the delineation of Art. XI dealing with quantitative restrictions from Art. III concerning internal regulations.
(141) GATT Panel Report, United States—Restrictions on Imports of Tuna, DS21/R, 3 September 1991, unadopted, BISD 39S/155, para 5.25 (italics added).
(148) B Kingsbury, ‘The Tuna-Dolphin Controversy, the World Trade Organization, and the Liberal Project to Reconceptualize International Law’ (1994) 5 Yearbook of International Environmental Law 1, 6; also compare the evocative 1971 report of the GATT secretariat in this regard, GATT Secretariat, GATT Studies in International Trade, No 1, Industrial Pollution Control and International Trade (1971).
(149) GATT Studies in International Trade, No 1, Industrial Pollution Control and International Trade (1971).
(150) GATT Panel Report, United States—Prohibition of Imports of Tuna and Tuna Products from Canada, L/5198, adopted 22 February 1982, BISD 29S/91, para 3.4.
(151) GATT Secretarial, Trade and the Environment (1992).
(152) For an analytical overview over see Kingsbury, ‘The Tuna-Dolphin Controversy’.
(153) S Charnovitz, ‘GATT and the Environment: Examining the Issues’ (1992) 4 International Environmental Affairs 203–33.
(154) J L Dunoff, ‘Reconciling International Trade with Preservation of the Global Commons: Can We Prosper and Protect’ (1992) 49 Washington & Lee Law Review 1407–54.
(155) A v Bogdandy, ‘Internationaler Handel und nationaler Umweltschutz: Eine Abgrenzung im Lichte des GATT’ (1992) Europäische Zeitschrift für Wirtschaftsrecht 243–7, 247 (noting that GATT adjudicators lacked the authority for balancing competing interests); J H Jackson, ‘World Trade Rules and Environmental Policies: Congruence or Conflict’ (1992) 49 Washington & Lee Law Review 1227–78 (finding a possible solution to lie in the waiver procedure). On this latter suggestion also see I Feichtner, ‘The Waiver Power of the WTO: Opening the WTO for Political Debate on the Reconciliation of Public Interests’ (2009) 20 European Journal of International Law 615–45.
(156) GATT Panel Report, United States—Restrictions on Imports of Tuna, DS29/R, 16 June 1994, unadopted, para 5.20.
(160) Howse and Regan, ‘Product/Process Distinction’, 274 (arguing in the negative: ‘process-based distinctions do not directly regulate any behaviour occurring outside the border…. [N]othing that has happened outside the border attracts, by itself, any criminal or civil sanction.’); L Bartels, ‘Article XX of GATT and the Problem of Extraterritorial Jurisdiction. The Case of Trade Measures for the Protection of Human Rights’ (2002) 36 Journal of World Trade 353–403, 377, (arguing to the contrary that that the ‘mere existence of legislation can amount to an international wrong regardless of whether the legislation is enforced’). Also see W Meng, Extraterritoriale Jurisdiktion im öffentlichen Wirtschaftsrecht (Heidelberg: Springer 1994), (embracing the concept of extraterritoriality).
(161) GATT Panel Report, United States—Prohibition of Imports of Tuna and Tuna Products from Canada, L/5198, adopted 22 February 1982, BISD 29S/91, at para 3.4.
(162) GATT Panel Report, United States—Restrictions on Imports of Tuna, DS29/R, 16 June 1994, unadopted, at para 5.34.
(163) D Driesen, ‘What is Free Trade? The real issue lurking behind the trade and environment debate’ (2001) 41 Virginia Journal of International Law 279–368, 306.
(165) The Doha Declaration invested the CTE with a renewed mandate, Doha Ministerial Declaration, WT/MIN(01)/DEC/1, 20 November 2001, at paras 31–33. Again, little progress could be made. Cf. Trebilcock and Howse, International Trade, 545–8. What the CTE indeed does is to pass notes on Art. XX that summarize the pertinent case-law and pay close lip-service to judicial reports. They barely add a single word of genuine assessment or direction, see, e.g., Committee on Trade and Environment, GATT/WTO Dispute Settlement Practice relating to GATT Article XX, paras (b), (d) and (g), Note by the Secretariat, WT/CTE/W/203, 8 March 2002.
(166) See generally E-U Petersmann, ‘The Transformation of the World Trading System through the 1994 Agreement Establishing the World Trade Organization’ (1995) 6 European Journal of International Law 161–221.
(167) P v d Bossche, From Afterthought to Centrepiece: The WTO Appellate Body and its Rise to Prominence in the World Trading System, in: G Sacerdoti, A Yanovich, and J Bohanes (eds), The WTO at Ten: The Contribution of the Dispute Settlement System (Cambridge: Cambridge University Press 2006), 289–325, 292–3.
(169) Dispute Settlement Body, Establishment of the Appellate Body, 19 June 1995, decision adopted on 10 February 1995, WT/DSB/1, paras 11–12.
(170) P v d Bossche, From Afterthought to Centrepiece: The WTO Appellate Body and its Rise to Prominence in the World Trading System, in: G Sacerdoti, A Yanovich, and J Bohanes (eds), The WTO at Ten: The Contribution of the Dispute Settlement System (Cambridge: Cambridge University Press 2006), 289–325. See further H Ruiz Fabri, ‘Le juge de l’OMC: Ombres et lumières d’une figure judiciaire singulière’ (2006) 110 Revue Générale de Droit International Public 39–83.
(171) P v d Bossche, From Afterthought to Centrepiece: The WTO Appellate Body and its Rise to Prominence in the World Trading System, in: G Sacerdoti, A Yanovich, and J Bohanes (eds), The WTO at Ten: The Contribution of the Dispute Settlement System (Cambridge: Cambridge University Press 2006), 289–325, 300–25.
(172) Cf. E A Posner and J C Yoo, ‘Judicial Independence in International Tribunals’ (2005) 93 California Law Review 1–74 (making the skewed and empirically dubious claim that independent courts are less effective); compare the critique by A-M Slaughter and L R Helfer, ‘Why States Create International Tribunals: A Response to Professors Posner and Yoo’ (2005) 93 California Law Review 899–956.
(173) A v Bogdandy, ‘Law and Politics in the WTO—Strategies to Cope with a Deficient Relationship’ (2001) 5 Max Planck Yearbook of United Nations Law 609–73; J E Alvarez, ‘The New Dispute Settlers: (Half) Truths and Consequences’ (2003) 38 Texas International Law Journal 405–44; L Bartels, ‘The Separation of Powers in the WTO: How to Avoid Judicial Activism?’ (2004) 53 International and Comparative Law Quarterly 861–95; P Eeckhout, ‘The Scales of Trade—Reflections on the Growth and Functions of the WTO Adjudicative Branch’ (2010) 13 Journal of International Economic Law 3–26.
(174) See J Klabbers, ‘On Rationalism in Politics: Interpretation of Treaties and the World Trade Organization’ (2005) 74 Nordic Journal of International Law 405–28.
(175) Appellate Body Report, Japan—Taxes on Alcoholic Beverages WT/DS8, 10 & 11/AB/R, 4 October 1996, pp 14–15.
(177) Hudec, International Trade Law, 265.
(178) Cf. J Gomula, ‘Precedential Effect of WTO Decisions: Note on the Zeroing Cases’ (2008) 1 The Global Community: Yearbook of International Law and Jurisprudence 295–317.
(179) Art. 17(6)(ii) was introduced upon the advocacy of the United States. At the time it was inserted into the agreement, the issue of zeroing was one of the big unresolved issues and, while the provision does not explicitly refer to zeroing, the US is not too far off when it relies on the article as evidence of disagreement over precisely this issue. See Appellate Body Report, United States—Final Anti-Dumping Measures on Stainless Steel from Mexico, WT/DS344/AB/R, 30 April 2008, para 39 (on the US submission in this regard). Cf. D McRae, Treaty Interpretation by the WTO Appellate Body: The Conundrum of Article 17(6) of the WTO Antidumping Agreement, in: E Cannizzaro (ed), The Law of Treaties Beyond the Vienna Convention (Oxford: Oxford University Press 2011), 164–85.
(180) On the Appellate Body’s take on its relation to the VCLT, see especially Appellate Body Report, United States—Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, 24 July 2001, para 59; Appellate Body Report, United States—Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R, 4 February 2009, para 312.
(181) Appellate Body Report, United States—Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R, 17 December 2004, para 188.
(182) Appellate Body Report, United States—Final Anti-Dumping Measures on Stainless Steel from Mexico, WT/DS344/AB/R, 30 April 2008, para 162. Also see Appellate Body Report, United States—Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R, 4 February 2009, paras 362–365; Appellate Body Report, United States—Measures Relating to Shrimp from Thailand, WT/DS343/AB/R, 16 July 2008 (concerning both issues of zeroing and a justification based on Art. XX(d)).
(183) Appellate Body Report, United States—Final Anti-Dumping Measures on Stainless Steel from Mexico, WT/DS344/AB/R, 30 April 2008, para 58.
(185) Panel Report, United States—Gasoline, WT/DS2/R, 29 January 1996, at para 6.28.
(187) Appellate Body Report, United States—Gasoline, WT/DS2/AB/R, 29 April 1996 (adopted 20 May 1996), pp 16–17.
(190) Ibid., at p 22. Note that in many concrete cases the distinction between the two is oftentimes far from evident. Compare R Wolfrum, Article XX GATT 1994, General Exceptions [Chapeau], in: R Wolfrum, P-T Stoll, and K Kaiser (eds), Max Planck Commentaries on World Trade Law, vol 2 (WTO—institutions and dispute settlement) (Leiden: Nijhoff 2006), 66–79, Mns 8–12.
(191) Panel Report, United States—Gasoline, WT/DS2/R, 29 January 1996, para 6.24, referencing GATT Panel Report, United States Section 337 of the Tariff Act of 1930, L/6439, adopted 7 November 1989, BISD 36S/345.
(192) Appellate Body Report, United States—Gasoline, WT/DS2/AB/R, 29 April 1996, p 23; referencing Corfu Channel Case (United Kingdom of Great Britain and Northern Ireland v Albania), 9 April 1949, (1949) ICJ Reports 4, p 24; Territorial Dispute Case (Libyan Arab Jamahiriya v Chad), 3 February 1994, (1994) ICJ Reports 6, p 23.
(193) Appellate Body Report, United States—Gasoline, WT/DS2/AB/R, 29 April 1996, p 17.
(194) GATT Panel Report, United States—Restrictions on Imports of Tuna, DS21/R, 3 September 1991, unadopted, BISD 39S/155, para 3.23.
(195) Panel Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products, WB/DS58/R, 15 May 1998, para 3.36. Cf. Bartels, ‘Extraterritorial Jurisdiction’, 386–7.
(196) Panel Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products, WB/DS58/R, 15 May 1998, para 7.53.
(199) Appellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products, WB/DS58/AB/R, 12 October 1998, para 10.
(203) Ibid., at paras 152–154. Cf. R Howse, ‘The Appellate Body Rulings in the Shrimp/Turtle case. A new legal baseline for the trade and environment debate’ (2002) 27 Columbia Journal of Environmental Law 491–521, 509–10.
(204) Appellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products, WB/DS58/AB/R, 12 October 1998, paras 161–176.
(207) Ibid., at para 133. Cf. R Wolfrum, Article XX GATT 1994, General Exceptions [Chapeau], in: R Wolfrum, P-T Stoll, and K Kaiser (eds), Max Planck Commentaries on World Trade Law, vol 2 (Leiden: Nijhoff 2006), 66–79, Mns 34–44.
(208) Appellate Body Report, Canada—Measures Affecting the Export of Civilian Aircraft (Article 21.5), WT/DS70/AB/R, 21 July 2000.
(209) Appellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products (Article 21.5), WB/DS58/AB/R, 22 October 2001, paras 84–99.
(210) Appellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products (Article 21.5), WB/DS58/AB/R, 22 October 2001, para 138.
(211) Trebilcock and Howse, International Trade, 532.
(212) Appellate Body Report, European Communities—Measures Affecting Asbestos and Products Containing Asbestos, WT/DS135/AB/R, 12 March 2001.
(213) Appellate Body Report, European Communities—Measures Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R, 13 July 1998, (adopted 23 July 1998), para 156. Remember that the Appellate Body does not have the possibility of remanding a case to the panel. Cf. J P Trachtman, ‘The World Trading System, the International Legal System and Multilevel Choice’ (2006) 12 European Law Journal 469–85.
(214) Appellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products, WB/DS58/AB/R, 12 October 1998, para 130.
(215) Legal Consequences for States of the Continuing Presence of South Africa in Namibia (South West Africa) notwithstanding Security Council Resolution 276 (1970), Advisory Opinion of 21 June 1971, ICJ Reports 16, p 31. See also Aegean Sea Continental Shelf (Greece v Turkey), Judgment of 19 December 1978, ICJ Reports 3, paras 76–77.
(217) Appellate Body Report, China—Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R, 21 December 2009, para 47.
(218) Ibid., at para 369. Cf. Panel Report, European Communities and its Member States—Tariff Treatment of Certain Information Technology Products, WT/DS375, 376 & 377/R, 16 August 2010 (At issue was again the interpretation of concession commitments in view of technological progress. The panel here found that it was unnecessary ‘to resort to any form of evolutionary interpretation of the terms, in light of our conclusion on the ordinary meaning of the terms.’ Quote at footnote 807).
(219) Alvarez, International Organizations, 472.
(220) Appellate Body Report, United States—Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, 29 April 1996, p 22; Appellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products, WB/DS58/AB/R, 12 October 1998, para 151.
(222) B Cheng, General Principles of Law as Applied by International Courts and Tribunals (London: Stevens 1953), 125.
(223) Appellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products, WB/DS58/AB/R, 12 October 1998, para 159.
(224) See M Byers, ‘Abuse of Rights: An Old Principle, A New Age’ (2002) 47 McGill Law Journal 389–431. On the distinction between the two concepts of abuse of right and proportionality that should probably not be glossed over too easily see, for instance, the discussion on the interpretation of former Art. 30 TEC by J Neumann and E Türk, ‘Necessity Revisited: Proportionality in World Trade Organization law after Korea-Beef, EC-Asbestos and EC-Sardines’ (2003) 37 Journal of World Trade 199–233, 205–6.
(225) M Hilf, ‘Power, Rules and Principles—which orientation for WTO/GATT law?’ (2001) 4 Journal of International Economic Law 111–30, 121; J P Trachtman, ‘The Domain of WTO Dispute Resolution’ (1999) 40 Harvard International Law Journal 333–78, 362–4. Cautioning against such a step, R Howse and K Nicolaïdis, Legitimacy and Global Governance: Why Constitutionalizing the WTO is a Step Too Far, in: R B Porter, P Sauve, A Subramian, and A B Zampetti (eds), Efficiency, Equity, Legitimacy and Governance: The Multilateral Trading System at the Millenium (Washington: Brookings 2001), 227–52; v Bogdandy, ‘Law and Politics in the WTO’.
(226) M Kumm, ‘Constitutional Rights as Principles: On the Structure and Domain of Constitutional Justice’ (2004) 2 International Journal of Constitutional Law 574–96.
(227) E Grabitz, ‘Der Grundsatz der Verhältnismäßigkeit in der Rechtsprechung des Bundesverfassungsgerichts’ (1973) 98 Archiv des öffentlichen Rechts 568–616 (on the formative years of the jurisprudence of the German Federal Constitutional Court); B Schlink, Abwägung im Verfassungsrecht (Berlin: Duncker & Humblot 1976); B Schlink, Der Grundsatz der Verhältnismäßigkeit, in: P Badura and H Dreier (eds), Festschrift 50 Jahre Bundesverfassungsgericht (Tübingen: Mohr Siebeck 2001), 445–65; R Alexy, Theorie der Grundrechte, (Frankfurt am Main: Suhrkamp 1994). Cf. M Hilf and S Puth, The Principle of Proportionality on its Way into WTO/GATT Law, in: A v Bogdandy, P C Mavroidis and Y Mény (eds), European Integration and International Co-ordination (The Hague: Kluwer 2002), 199–218, 200–2 (striking a link between these domestic practices and the Appellate Body’s reasoning in United States—Gasoline and United States—Shrimp).
(228) German Constitutional Court, Wencker, 15 December 1965, 19 BVerfG 342, p 349 (finding that proportionality analysis follows directly from the nature of fundamental rights—‘aus dem Wesen der Grundrechte selbst’); German Constitutional Court, Zweckentfremdung von Wohnraum, 4 February 1975, 38 BVerfG 348, p 368 (tying proportionality analysis to the principle of the Rechtsstaat).
(229) Not only to avoid theoretical squabbles about something like a ‘strict sense’ at this point, but also to avoid confusion by using the same expression for the whole test as well as its last element, I do not adopt that terminology but rather speak of ‘appropriateness’.
(230) For an illustrative example from domestic constitutional law with a critical view on the negative repercussions of balancing, see J v Bernstorff, ‘Pflichtenkollision und Menschenwürdegarantie: Zum Vorrang staatlicher Achtungspflichten im Normbereich von Art. 1 GG’ (2008) 47 Der Staat 21–40.
(231) Case 174/82, Sandoz (1983) ECR 2445, para 18; Joined cases C-13/91 and C-113/91, Debus (1992) ECR I-3617, para 16; cf. J H H Weiler, Epilogue: Towards a Common Law of International Trade, in: J H H Weiler (ed), The EU, the WTO and the NAFTA. Towards a common law of international trade? (Oxford: Oxford University Press 2000), 201–32 (juxtaposing developments in European law with international trade law).
(232) From the abundance of jurisprudence on this issue, see Case of Gillow v The United Kingdom, 24 November 1986, paras 55 and 120. Cf. J Frowein, Vorbemerkungen zu Art. 8–11, in: J Frowein and W Peukert (eds), EMRK-Kommentar (Kehl am Rhein: N.P. Engel 2009), 279–86, 284–86.
(233) For a clear-cut expression of proportionality see Art. 51(5)(b) Protocol Additional to the Geneva Conventions of 12 August 1949 (Protocol I), 8 June 1977 (prohibiting ‘an attack which may be expected to cause incidental loss of civilian life, injury to civilians, damage to civilian objects, or a combination thereof, which would be excessive in relation to the concrete and direct military advantage anticipated’). Cf. C Pilloud and Y Sandoz, Commentary on the Additional Protocols of 8 June 1977 to the Geneva Conventions of 12 August 1949 (Geneva: Nijhoff 1987), 625–6.
(234) Military and Paramilitary Activities in and Against Nicaragua (Nicaragua v United States Of America), Judgment of 27 June 1986, ICJ Reports 14, para 176 (noting that the UN Charter ‘does not contain any specific rule whereby self-defence would warrant only measures which are proportional to the armed attack and necessary to respond to it’ but finding that this is ‘a rule well established in customary international law.’). Also see Legality of the Threat or Use of Nuclear Weapons, Advisory Opinion of 8 July 1996, ICJ Reports 226, paras 41 and 46. Cf. M Krugmann, Der Grundsatz der Verhältnismäßigkeit im Völkerrecht (Berlin: Duncker & Humblot 2004); E Cannizzaro, Il principio della proporzionalità nell’ordinamento internazionale (Milano: Giuffrè 2000).
(235) Also see Gabčíkovo-Nagymaros Project (Hungary v Slovakia), Judgment of 25 September 1997, ICJ Reports 7, para 85.
(236) Appellate Body Report, United States—Transitional Safeguard Measure on Combed Cotton Yarn from Pakistan, WT/DS192/AB/R, 8 October 2001, paras 120 and 122.
(238) T Sebastian, ‘World Trade Organization Remedies and the Assessment of Proportionality: Equivalence and Appropriateness’ (2007) 48 Harvard International Law Journal 337–82, 344 (noting that ‘significant parts of the law relating to WTO remedies must, by necessity, emerge from arbitral rulings rather than negotiated treaty text’).
(239) See Appellate Body Report, United States—Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea, WT/DS202/AB/R, 15 February 2002, paras 257–259. Cf. A D Mitchell, ‘Proportionality and Remedies in WTO Disputes’ (2006) 17 European Journal of International Law 985–1008.
(240) See A Desmedt, ‘Proportionality in WTO Law’ (2001) 4 Journal of International Economic Law 441–80 (offering an overview and comparison of the fields of trade law where proportionality has or might become relevant).
(241) Appellate Body Report, Korea—Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161 & 169/AB/R, 11 December 2000, paras 159–160.
(249) E Ruozzi, L’application du principe de proportionnalité en droit de l’Organisation Mondiale du Commerce, in: H Ruiz Fabri and L Gradoni (eds), La Circulation des Concepts Juridiques (Paris: Société de législation comparée 2009), 475–92, 475–80; D Regan, ‘The Meaning of “Necessary” in GATT Article XX and GATS Article XIV: The myth of cost-benefit balancing’ (2007) 6 World Trade Review 347–69, 347–53.
(250) Appellate Body Report, European Communities—Measures Affecting Asbestos and Products Containing Asbestos, WT/DS135/AB/R, 12 March 2001, paras 113–115 and 129–131. On the findings about the two products’ ‘likeness’ see above note 92.
(251) Appellate Body Report, European Communities—Measures Affecting Asbestos and Products Containing Asbestos, WT/DS135/AB/R, 12 March 2001, para 172.
(252) Compare H Ruiz Fabri, Drawing a Line of Equilibrium in a Complex World, in: G Sacerdoti, A Yanovich, and J Bohanes (eds), The WTO at Ten: The Contribution of the Dispute Settlement System (Cambridge: Cambridge University Press 2006), 125–42, 141 (suggesting that this may be read as a signal sent by the judges that, once they get the chance, they would decide accordingly). The AB might also have intended to deter Canada from bringing the case again under the TBT Agreement. Cases have since increasingly shifted towards this basis, see the recent Appellate Body Report, United States—Measures Affecting the Production and Sale of Clove Cigarettes, WT/DS406/AB/R, 4 April 2012, paras 88–109 (noting that its analysis would be confined to the TBT Agreement and would not extend to Art. XX GATT).
(253) Appellate Body Report, United States—Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R, 7 April 2005, paras 305–308 (involving Art. XIV GATS); Appellate Body Report, Brazil—Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R, 3 December 2007, paras 176–183. Cf. F Ortino, ‘Treaty Interpretation and the WTO Appellate Body Report in United States—Gambling: A critique’ (2006) 9 Journal of International Economic Law 117–48.
(254) Appellate Body Report, Korea—Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161 & 169/AB/R, 11 December 2000, para 162. Even where parties to the dispute invoke this element of the Korea—Beef precedent, the Appellate Body did not again take it up. See Appellate Body Report, Brazil—Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R, 3 December 2007, paras 24, 90, and 176–183.
(255) Appellate Body Report, Brazil—Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R, 3 December 2007, para 137.
(257) It should also be noted that the SPS agreement might be interpreted so as to take away from the credo that members get to choose their own level of protection. It might indeed open up the way for examining a measure’s appropriateness, see above all the interpretation of Art. 5(6) SPS Agreement in Appellate Body Report, Japan—Measures Affecting the Importation of Apples, WT/DS245/AB/R, 16 November 2003. Whether reasoning with regard to special agreements might spill over into the interpretation of Art. XX is much debated. See D J Neven and J H H Weiler, Japan—Measures Affecting the Importation of Apples: One Bad Apple?, in: H Horn and P C Mavroidis (eds), The American Law Institute Reporters’ Studies on WTO Case Law (Cambridge: Cambridge University Press 2007), 850–79.
(258) The relationship between normative assessment and analysis of facts (if court jurisprudence or behaviour may be seen as facts) is of course much more complex than it could be discussed here. See only the by now classical Positivismusstreit summarized in T W Adorno, A Hans, R Dahrendorf, J Habermas, H Pilot, and K R Popper, Der Positivismusstreit in der deutschen Soziologie (Neuwied: Luchterhand 1969).
(259) Dunoff, ‘International Trade and Global Commons’ (1992).
(260) Hilf and Puth, Principle of Proportionality, 199.
(261) Ruozzi, Principe de proportionnalité, 480–4; G Marceau and J P Trachtman, ‘The Technical Barriers to Trade Agreement, the Sanitary and Phytosanitary Measures Agreement, and the General Agreement on Tariffs and Trade: A map of the World Trade Organization law of domestic regulation of goods’ (2002) 36 Journal of World Trade 811–81, 826–8, and 851–3; A-C Martineau, ‘La technique du balancement par l’Organe d’appel de l’OMC (études de la justification dans les discours jurisdiques)’ (2007) 123 Revue du Droit Public 991–1030, 1005–7; M Andenas and S Zleptnig, ‘Proportionality: WTO Law in Comparative Perspective’ (2007) 42 Texas International Law Journal 371–427, 408–16; Wouters and De Meester, World Trade Organization, 57–8.
(262) Trachtman, ‘WTO Dispute Resolution’, 362; Alter, Delegating to International Courts.
(263) Cf. Martineau, ‘La technique du balancement’, 1022–30.
(264) D Z Cass, The Constitutionalization of the World Trade Organization. Legitimacy, Democracy, and Community in the International Trading System (Oxford: Oxford University Press 2005), 34; E-U Petersmann, From ‘Member-driven Governance’ to Constitutionally Limited ‘Multi-level Governance’ in the WTO, in: G Sacerdoti, A Yanovich, and J Bohanes (eds), The WTO at Ten: The Contribution of the Dispute Settlement System (Cambridge: Cambridge University Press 2006), 86–110, 99–104.
(265) Andenas and Zleptnig, ‘Proportionality’, 414.
(266) Committee on Trade and Environment, GATT/WTO Dispute Settlement Practice relating to GATT Article XX, paragraphs (b), (d) and (g), Note by the Secretariat, WT/CTE/W/203, 8 March 2002, para 42.
(267) WTO Secretariat, World Trade Report 2005: Exploring the Links between Trade, Standards and the WTO (2005), 135–6.
(268) D Regan, ‘The Meaning of “Necessary” in GATT Article XX and GATS Article XIV: The myth of cost-benefit balancing’ (2007) 6 World Trade Review 347–69; P C Mavroidis, ‘Trade and Environment after the Shrimps-Turtles Litigation’ (2000) 34 Journal of World Trade 73–88, 79; B McGrady, ‘Necessity Exceptions in WTO Law: Retreaded Tyres, Regulatory Purpose and Cumulative Regulatory Measures’ (2009) 12 Journal of International Economic Law 153–73. Also see A Lang, ‘Reflecting on Linkage: Cognitive and Institutional Change in the International Trading System’ (2007) 70 Modern Law Review 523–50 (offering a thorough critique of the discourse around the ‘trade-and…’ topic and suggesting that it in effect entrenches the categorical preference for free trade objectives).
(269) See Panel Report, Canada—Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/R, 30 August 2004, para 6.226 (connecting proportionality analysis to the question of a reasonably available alternative).
(270) Neumann and Türk, ‘Necessity Revisited’; Desmedt, ‘Protionality’, 475–6 (noting, however, that there are other places in WTO law, like the law on countermeasures, where proportionality may well have a role to play).
(271) Appellate Body Report, Korea—Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161 & 169/AB/R, 11 December 2000, para 164.
(272) Jacob, ‘Precedents’; M J Gerhardt, The Power of Precedent (Oxford: Oxford University Press 2008), 79.
(273) Habermas, Faktizität und Geltung, 516; Luhmann, Recht der Gesellschaft, 151.
(274) Appellate Body Report, Japan—Taxes on Alcoholic Beverages, WT/DS8, 10 & 11/AB/R, 4 October 1996, pp 14–15.
(275) Appellate Body Report, United States—Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R, 4 February 2009, paras 362–365.
(276) G Abi-Saab, The Appellate Body and Treaty Interpretation, in: G Sacerdoti, A Yanovich, and J Bohanes (eds), The WTO at Ten: The Contribution of the Dispute Settlement System (Cambridge: Cambridge University Press 2006), 453–64, 455.
(277) Appellate Body Report, Japan—Taxes on Alcoholic Beverages, WT/DS8, 10 & 11/AB/R, 4 October 1996; Appellate Body Report, European Communities—Measures Affecting Asbestos and Products Containing Asbestos, WT/DS135/AB/R, 12 March 2001.
(278) Appellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products, WB/DS58/AB/R, 12 October 1998, para 133.
(279) Cf. Trebilcock and Howse, International Trade, 543–4 (arguing that Korea—Beef did not introduce any additional requirement of proportionality into the adjudicators’ assessment but rather opened up more leeway on the part of member state regulation and reversed the restrictive trend that took off with Thai Cigarettes).
(280) For an early argument to this effect, R Howse, Adjudicative Legitimacy and Treaty Interpretation in International Trade Law, in: J H H Weiler (ed), The EU, the WTO and the NAFTA: Towards a Common Law of International Trade? (Oxford: Oxford University Press 2000), 35–69.
(281) M Ioannidis, ‘A Procedural Approach to the Legitimacy of International Adjudication: Developing Standards of Participation in WTO Law’ (2011) 12 German Law Journal 1175–202; R B Stewart and M Ratton Sanchez Badin, ‘The World Trade Organization and Global Administrative Law’ (2011) 9 International Journal of Constitutional Law 556–86.
(282) I Feichtner, The Law and Politics of WTO Waivers: Stability and Flexibility in Public International Law (Cambridge: Cambridge University Press 2012).
(283) Cf. T Kleinlein, ‘Establishing Elements of Pluralist Constitutionalism in International Law by Recourse to Formal Principles’ (2011) 12 German Law Journal 1141–74.