Law

Question 1
General Agreement on Trade and Tariffs. The article has several sub-provisions. GATT Article XX describes regulations that WTO members should follow in employing trade measures. These regulations are applicable both at the national level and international level where agreements with other countries have been made (Condon, 2005). Article XX provides the exceptions to the rules governing international trade described in the other articles of GATT. It has an introduction paragraph or chapeau that governs against discrimination as the sub provisions lay out the circumstances in which the imposition of measures that restrict trade are acceptable. Subprovision a, allows a country to use trade measures where these measures are aimed at protecting public morals. Subprovision b allows trade measures to be used in instances where a country is protecting health (human or animal) and plant life. It has mostly been invoked where a state is trying to protect the environment. Subprovision f allows for the use of trade measures where a country is trying to preserve or protect artistic, historic or archaeological works that are considered national treasures. The trade measures include import bans and tariffs but the measures have to be applied indiscriminately to both foreign and domestic products for them to be upheld.

Question 2
The panel Report on the case of the United States Standards for Reformulated and Conventional Gasoline seems to have applied the necessary test in the examination of the baseline rules under Article XX subprovision b. The Apellate Body holds that when interpreting the General Agreement, the words are to be interpreted with their ordinary meaning, within context and with regard to the objective and purpose of the treaty (Petersman,1997). In this case, Venezuela lodged a complaint to the Dispute Settlement Body that the US had put in place measures that were discriminatory of gasoline imports from Venezuela. Venezuela argued that the US applied rules that were stricter than those it applied for its domestic gasoline. This was seen to be unfair because the US gasoline had different standards and thus violated the principle of national treatment further the measures taken by the US were not justifiable under GATT Article XX. The Panel found that the actions of the US were not consistent with Article III and were not justifiable under paragraphs b, d and g. On appeal, the Panel upheld the decision of the Panel but the interpretation for the ruling was different. The Panel found that the Gasoline Rule was within the provisions of Article XX (g) but did not meet the requirements for the introductory paragraph of Article XX. The Appelate Body applied a necessity test following the use of the words necessary. In its interpretation of the word necessary, the Appelate Body found that the US had failed to explore adequate means of mitigating the problems that the US was using as justification for rejecting the baselines for foreign refiners (Petersmann, 1997). The full reference for this case is United States Standards for Reformulated and Conventional Gasoline, WTO case Nos 2 and 4, Ruling adopted 20 May 1996.

In another case, the Appellate Body, found that measures put in place by Brazil were inconsistent with WTO regulations. Brazil had put import bans on retreaded tyres and argued that the waste tyres formed mosquito breeding grounds making it necessary to ban them as preventive measures for spread of mosquito-borne illnesses (McGivern, 2009). The Appellate Body found that under GATT Article XX(b) the measures were permissible but it also found that the application of the measures was discriminatory as they were applied unequally. In deciding this case, the Appellate Body introduced a material contribution test for determining what would be considered necessary under subprovision b of Article XX. Brazil argued that if the Panel found that a measure had no reasonable alternatives, then the measure should be considered necessary, irrespective of how small the contribution is. The Appellate Body did not agree with this it stated that the measure put in place had to be material and not be insignificant more so where the measure was restrictive to trade for example and import ban (WTDS332 p19).

The material contribution test has the effect of imposing discipline on WTO members who would like to invoke Article XX (b) in a bid to justify trade measures that are inconsistent with WTO. Those members of WTO who seek to invoke Article XX (b) must therefore establish that the measure put in place has a substantial and not marginal contribution to the objective for which the country seeks exception (WTDS332 p20). In the ruling the Appellate Body was flexible in the establishment of material contribution and stated that a quantitative or qualitative analysis to establish material contribution would suffice (Patrick et al, 2005). This is important as various risks to health or human life may not be quantifiable (for example measures that alleviate climate change and global warming) (WTDS332 p20). The case described above was obtained from the WTO website under the disputes link.

The word necessary is used in sub provisions b, d and f. The Appellate Body in its ruling on the Reformulated Gasoline case stated that it did not seem reasonable to expect the same degree of connection between the measure being appraised and the state policy that is being promoted. The Appellate body has been analyzing all health or environmental cases by first testing to ensure that a measure can be justified under the subprovisions of Article XX then testing to ensure that the measure satisfies the introductory provision. The word relating to in comparison to necessary is taken to have a wide range of measures that could be applied while necessary is interpreted to require more scrutiny in establishing the justification for the measure that has been applied.

Necessary as a term applies to all measures regardless of whether they are territorial or extraterritorial. Often, the territorial connection is more obvious in some cases than others, for instance, global warming and depletion of the ozone may have a greater territorial connection than a measure that seeks to protect endangered species or protect biodiversity. Thus the proof that the measure is necessary will be of varying degrees in every situation.

Paragraph XX (a) makes the exemptions for measures that protect public morals. It also uses the word necessary. Public morals differ from culture to culture thus in this case the morals that would be protected should be those belonging to the citizens of the enacting member state. Sub provision d of the article also uses the word necessary with regard to ensuring compliance of regulations that are inconsistent with the provisions in the agreement. The paragraph is not specific concerning the laws that are in question thus it is assumed that they are those of the enacting member state. An example here would be custom regulations in the country that is enacting the measures.

Question 3
Sebastien Thomas (2009) in his paper analyses the recent developments with regard to restrictive trade measures under GATT Article XX. He describes the necessity test in subprovision b as one of the first legal benchmarks that any state imposing a trade measure with the objective of protecting the environment will have to pass. He argues that the Appellate Body ruling in the case of Brazils retreated tyres  sees more attention being given to whether a restriction is necessary or not. According to him the second legal test is found in the introductory clause of Article XX. The clause, also known as the chapeau prevents those measures which would achieve the objectives listed in the subprovisions in a discriminatory manner. He highlights the Brazil case of retreaded tyres where Brazil put import bans on those tyres from other countries but did not apply the same standards to those tyres produced in the domestic market. The interpretation of GATT XX (b) in this way sets a precedent for evaluating the good faith of a WTO member as it enacts measures that restrict trade. Thomas further postulates that the European Union will perhaps have greater freedom for enacting measures whose objective is to protect the environment without breaching WTO regulations (Thomas, 2009). The information above was found using the Google search engine.

Chang (2009) describes the attitude towards measures put in place to protect the environment as hostile. He claims that the ruling of the Appellate Body on the shrimp-turtle case paved the way toward better treatment of such measures under GATT XX. The US had banned tuna imports from those countries that had not yet adopted programs that would protect dolphins. The country did this in line with the objectives of the Marine Mammal Protection Act (MMPA). The US argued that it had banned shrimp imports as a protective measure falling under GATT Article XX (b). The US however lost before the WTO panel and again lost the case before the Appellate Body. The ruling of the Appellate Body however had much different legal reasoning. Chang argues that it paid better attention to the meaning of the language in GATT Article XX. The Panel required that the measure that would be allowed under Article XX should not be one that undermined the multilateral trading system of the WTO. The Appellate Body however rejected this requirement, but still upheld the ruling of the panel. The Appellate Bodys decision was based on the fact that the measures that the US was applying did not apply to product from its own domestic market, hence there was some degree of discrimination. In this case, the United States trade restrictive measure did not meet the chapeau of GATT Article XX (Chang, 2009). According to Chang, the ruling of the Appellate Body held that to prevent unjustifiable discrimination the country that was imposing import bans had to provide a hearing that would allow the exporting country to argue for the existence of environmental policies that are comparable to that of the importing country even if they may bear some differences. The exporting country should also have negotiations that are open and on an equal basis with the importing country and the importing country should make some efforts to transfer technology to the exporting country as well as adequate notice for any adverse decisions and the procedure of appeal or review for such decisions (Chang, 2009).

Qin (2009) discusses the Brazil import ban on retreaded tyres with regard to the decision by the Apellate Body and the subsequent award of the Appellate Body. Qin holds that the decision and award gave rise to a conflict in the rulings of the Mercosur and WTO, which could have implications for the environmental issues in contention. Qin states that the major differences in the decisions of the Panel and the Appellate Body lie in the interpretation of the language of the chapeau of GATT Article XX. Qin asserts that the panel focused on interpreting unjustifiable discrimination in passing their ruling. According to the panel, the injunctions of Brazilian courts resulted in unjustifiable discrimination because there was such a large volume of imports that the import ban was having its objective getting undermined. The Appellate Body found this approach to be quantitative and rejected it, arguing that the assessment of discrimination should involve an analysis of whether the cause of the discrimination relates to the rationale for discrimination (Report of the Appellate Body). Qin concludes by stating that the decision of the Appellate Body is perhaps more pro-environment than that of the panel. In both cases the Appellate Body and the Panel made firm decisions that indicate that import bans that have been unilaterally imposed to protect the environment and health can find compatibility with the WTO Agreement (Qin, 2009).

Question 4
Directive 200295EC and Directive 200296EC are two directives that affect the production of electrical and electronic equipment. Directive 200295EC (ROHS) has regard to the restrictions on the use of hazardous substances in electronic equipment and electrical equipment while directive 200296EC (WEE) deals with the wastes of electrical equipment and electronics. The ROHS directive prohibits usage of cadmium, lead, mercury, polybrominated biphenyls, polybrominated diphenylethers and hexavalent chromium in electronic equipment and electrical equipment (Ashford, 2002). The main objective of this directive is to alleviate the impact that electrical and electronic equipment have on the environment when they reach the end of their life by minimizing the hazardous substances used to make them. This directive affects small and large household appliances, telecommunication equipment, lighting equipment, leisure and sports toys, automatic dispenses, electric bulbs among other IT equipment. Medical devices are not included in this directive.

The WEEE directive lays out criteria for the treatment, collection, recovery and recycling of waste from electronics and electrical equipment. It also ensures the producers remain responsible for financing these waste removal activities. The imposition of financial responsibilities on the producers is supposed to serve as a motivation for the producers to reduce the use of products that have a negative impact on the environment (Michener, 2003). The directive covers a range of products similar to those covered by the ROHS but also includes medical devices. Additionally, it sets targets for re-use, recovery and recycling of waste products from electronics and electrical equipment. These targets are mandatory. The EU requires that those producers who export their waste from the EU conduct re-use recovery and recycling activities similar to the requirements in the Directive (Michener, 2003). Every producer is expected to provide a guarantee for financing of the waste product of an electronic period, when they put the product on the market (Michener, 2003).

The RHOS directive seems to put a de facto import ban in the EU for electronics and electrical equipment that contain the aforementioned substances. This then seems to create a quantitative restriction on imports, which leads to a conflict with GATT Article XI. The question begs then whether the restriction is justified under GATT Article XX (b). To answer this, the EU should prove that the measures (the directives) are necessary to meet the objective of the stated environmental policy. The EU may demonstrate that the effect of the substances that they have banned are so significant that there is no other alternative that is less restrictive apart from the complete ban of the substances named in mitigating the risks (Michener, 2003).  The information was found from the European Union website and from searches of documents with the words GATT XX and European Union directives. Searches of international law journals were also other sources of this information.

Question 5
The trade provisions in the EC treaty have been shaped largely by the GATT 1947 and the WTO. Most of the wording from Article XX of the general exceptions was borrowed largely from the derogations of Article 30 (Barnard, 2007). Article 30 of the EC Treaty contains some exceptions to trade restrictions and imposition of bans on imports just like the GATT Article XX. The exceptions are allowed as long as they do not lead to discrimination or create a situation of disguised trade restriction amongst Member States. The measures are justified on such grounds as public policy, public morality, public security, protection of life and health of humans, protection of the life of plants or animals, protection of industrial or commercial property, protection of the national treasures that may have historic, artistic or archaeological value (World Resources Institute, 2003 Merryman and Elsen, 2002). The wording of these exceptions is very similar to that of the subprovisions in Article XX of the GATT. The information above was obtained from the European Commission website and from academic papers discussing either the GATT Article XX or Article 30 of the EC treaty or both of them. Another similarity between the two documents is that both texts that of the GATT and the EC treaty did not have explicit reference to the settlement of disputes concerning the environment (Petersmann, 1997).

Question 6
The European Commission in February 2007 passed a proposal for a regulation that would lay down the procedures for some technical rules for products that were marketed lawfully in different member states. In the Danish Bottle case, the European Commission ruled against a Danish regulation that required beer and soft drinks to be sold in containers that were returnable and could be refilled. The containers had to pass approval by the environmental agency in Denmark to confirm that the bottles were actually reusable. The Commission encouraged Denmark to change its laws upon receiving complaints from other Member States that had been denied market access following failure to comply with the laws (Trebilcock and Howse, 2005).

Denmark later made approvals for containers that were not approved as long as they did not exceed 3000 hectoliters for every firm and that there was a deposit and return system that had been established. The Commission was not satisfied by this legislation but on appeal to the European Court of Justice, the court found that Denmarks requirements were legal using the Casis de Dijon reasoning (Trebicock and Howse, 2005). The ECJ however found the 3000 hectoliter restriction to be out of line with Article 30 the Court stated that though the system Denmark had adopted for containers afforded superior protection of the environment, the containers that did not conform remained environmental friendly. The ECJ consequently applied a least restrictive trade test and passed the ruling that the restriction had failed as there was in existence a less trade restrictive alternative (Trebilcock and Howse, 2005). The Danish Container case was in violation of various GATT articles such as Article III, XI, II and could not be saved by any of the exceptions of Article XX. The case shows how a court can apply a test of proportionality to balance the competing objectives of environmental protection and free trade. However, some critics have argued that the court readily accepted the law, thus setting the precedent for other EC members to take measures that would protect their industries by claiming that these measures were protecting the environment (CIESIN, 1994).

Germany invoked the GATT in Germany vs. Council in its argument, in a bid to challenge the regulations made by the European Community regarding bananas. The argument that Germany presented was that the adherence of the European Community to the GATT prevented the council from applying or adopting the regulations which were illegal as per the GATT provisions. Thus Germany, argued it had the right to use the obligations required by GATT when in dispute with the Council. The Court of Justice however, ruled against Germany stating that Germany though it had voted against Community legislation was bound by this legislation. The Council had an inherent power to act in a manner inconsistent with the GATT if it chose to (Germany, 1994).

Question 7
The commercial growing of genetically modified crops is an issue that has seen the GATT Article XX being invoked. This issue falls under certain legal instruments which include the European Union Directive 90220EEC and Article 100 of the EC treaty, the WTO GATTS and agreement on Sanitary and Phytosanitary Measures and the 1992 Convention on Biological Diversity. The directive was issued as an internal market measure under Article 100 which has proposals regarding health, environmental protections, safety and consumer protection. Article 16 of this directive allows Member states to restrict the sale or use of products that may pose a health risk to humans or to the environment (Sands, 1999). Measures being proposed by such groups as Friends of the Earth to stop the production of GMOs are catered for in the GATT Article XX (b) (g). These articles have been interpreted by the Appellate Body and Panels of WTO in a domestic context and are therefore applicable to the risks associated with the GMOs (Sands, 1999).
The government of the UK asserted that it EU law constrains from issuing a moratorium that is legally-binding. In this case Friends of the Earth Limited (FoE) and the Royal Society for the Protection of Birds (RSPB) have been campaigning for the government to issue a moratorium that would prohibit (non-permanent or provisional prohibition) the growing of GM crops for commercial purposes. These organizations have one thing in common which is the concern over the possible environmental damage that may result from growing of the genetically modified crops (Sands, 1999). The concern is extended to possible negative impact on health following consumption of food that has come from the genetically modified crops. Different organizations identify different impacts ranging from gene transfer, changes in biological diversity due to a change in practices of land use, the development of insects to genetically modified crops that may have an effect on insecticides among others (Sands, 1999). The Ministers for Agriculture and Environment had announced measures in response to the efforts of the organizations. Some of the -measures included a reassessment of the herbicides that would be used on the GM herbicide crops that are tolerant, a review of pesticides that could be used on genetically modified crops, establishing a group on Biotechnology and Genetic Modification and the evaluation of genetically modified for effects on the ecology (DETR News Release, 1998). A moratorium on the genetically modified crops by the UK could invoke Article XX (b) or (g) in justifying this measure.

Question 8
GATT Article XX gives the provision in which members of the WTO are free to use trade measures that would otherwise be inconsistent with the obligations of GATT. Beginning from this premise, the UK in this case has a right to put in place protection standards for imports of orchids. The GATT Article XX empowers the UK to employ these measures in international agreements like with trade in Thailand and also at the national level. Subprovision b allows the UK to protect interests within the country and also to put in place measures that are aimed at changing the policies of another WTO member, in this case Thailand.

The UK government has to demonstrate that the measure that is taken is necessary to meet the protective objective. There should be no other less stringent alternatives for the legislation of the UK government with regard to the Orchid Act.  The introductory paragraph of GATT Article XX allows for protective measures to be put in place as long as there is no discrimination. That is the product from the UK should be subjected to similar legislation. The measure employed by the UK should also have material contribution to the achievement of the objective of the UK Orchid Act.

In demonstrating this material contribution, the UK will be required to show either quantitatively or qualitatively, how the measure and protection of the product, environment are related. In GATT Article XX (g), the words, relating to, are interpreted to have a wider range of measures other than the application of trade rules that are strict as compared to the word necessary in sub provision b. This indicates that there needs to be a high level of justification for the measures taken by the UK. The measures taken by the UK may be justified by invoking paragraph XX (b) and paragraph XX (g). This is because most of the measures that would fit paragraph can find their way into paragraph XX (g).

The UK government should also demonstrate the territorial reach of the legislation that it has applied. In this case it seems to b a local interest that does not involve transcending boundaries. A test that is likely to be administered in this case is whether there is some proximity of interest to the subject matter being protected. Proximity of interest is largely determined by the impact that the problem has on the UK.

The chapeau has the objective of preventing the abuse of those exceptions described in Article XX. It does this through three standards which the UK in this case has to meet. The standards include ensuring that there is no discrimination where two countries have similar prevailing conditions. This may not apply much to the UK and Thailand case as they have different prevailing conditions. The Panel of the WTO would seek to test for arbitrary discrimination andor unjustifiable discrimination. Determining arbitrary andor unjustifiable discrimination would involve finding a balance between the right of the UK to invoke an Article XX exception and the duty that the UK has of respecting the treaty rights of Thailand (WTDS58ABR). Another important standard that the UK would have to meet is to ensure that the measures that it has employed are not a disguised way of restricting international trade.

The Appellate Body generally tends to strike down the measures where it can identify other alternative measures that a member state could have taken. It also strikes down those measures that generally can be avoided or where the degree of discrimination can be reduced, thus the UK will need to ensure that as far as possible discrimination levels have been kept to a minimal and that other possible solutions have been exhaustively been looked into. Further, the Appellate body in its previous rulings has implied that it would like to see greater and well-substantiated evidence of efforts to reach a multilateral or bilateral agreement solution before a trade measure is taken unilaterally (WTDS58ABR).