NAME: Chaitanya SUBMITTED TO: Ms.

Priya Anuragini
SECTION-A ENROLMENT NO:170101047
TOPIC: JURISPRUDENTIAL LINKAGE BETWEEN TRADE AND
ENVIRONMENT UNDER ARTICLE XX OF GATT 1994

TABLE OF CONTENTS

INTRODUCTION 2

ENVIRONMENTALISM IN GATT – ARTICLE XX 3

I. The nature and function of Article XX of GATT 1994. 3

II. The two-tier test under Article XX of GATT 1994. 4

III. Specific exceptions under Article XX of GATT 1994. 5

a) Article XX (b): ‘measures necessary to protect human, animal or plant

life or health’. 5

b) Article XX (g): ‘measures relating to the conservation of exhaustible

natural resources.’ 8

IV. The chapeau of Article XX of the GATT 1994. 10

a) ‘Arbitrary or unjustifiable discrimination between countries where the

same conditions prevail’. 11

b) ‘Disguised restriction on international trade’. 12

V. Scope for Members to Protect other Societal Values. 13

CONCERNS OF DEVELOPING COUNTRIES 14

CONCLUSION 16

BIBLIOGRAPHY 18

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 INTRODUCTION

The promotion and protection of public health, consumer safety, the environment, employment,
economic development and national security are core tasks of governments. Often, trade
liberalisation and the resulting availability of better and cheaper products and services facilitate the
promotion and protection of these and other economic and non-economic societal values and
interests. Through trade, environmentally friendly products or life-saving medicines, that would not
be available otherwise, become available to consumers and patients respectively. At a more general
level, trade generates the degree of economic activity and economic welfare indispensable for the
effective promotion and protection of the societal values and interests referred to above. In order to
protect and promote these societal values and interests, however, governments also frequently adopt
legislation or take measures that inadvertently or deliberately constitute barriers to trade. Members
are often politically and/or economically ‘compelled’ to adopt legislation or measures which are
inconsistent with the rules of WTO law and, in particular, with the principles of non-discrimination
and the rules on market access. Trade liberalisation, and its principles of non-discrimination and
rules on market access, often conflict with other important societal values and interests.
This article considers the approaches of the General Agreement on Tariffs and Trade (GATT) and
the World Trade Organisation (WTO) to trade, the environment and sustainable development. It
examines the main principles and rules of GATT/WTO which are relevant for the examination of
the trade-environment issues and the dilemmas they pose for trade and development prospects of
developing countries.
The main objective of this article is to identify and illustrate the pressing issues for developing
countries in the process of intersection between multilateral trade liberalisation and the
environment.
In view of the concerns of developing countries regarding the interaction between trade and the
environment, the article argues that the objectives of sustainable development can be achieved by
taking into account the developmental needs, limited resources and level of economic development
of developing countries. Developing countries’ concerns need to be addressed as a priority in order
to make any progress in achieving the global objectives of environmental protection and sustainable
development.

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 ENVIRONMENTALISM IN GATT – ARTICLE XX

I. The nature and function of Article XX of GATT 1994.

Article XX allows for, inter alia, the protection of some important noneconomic societal values,
such as public health and the environment. Paragraphs (c), (h), (i) and (j) relate to trade in gold and
silver; obligations under international commodities agreements; efforts to ensure essential quantities
of materials to a domestic processing industry; and products in general or local short supply. They
are not relevant for this paper. Also, these paragraphs have been, and still are, of less importance in
international trade law and practice than the other paragraphs of Article XX.
In general, Article XX is relevant and will be invoked by a Member only when a measure of that
Member has been found to be inconsistent with another GATT provision. In such a case, Article XX
will be invoked to justify the GATT- inconsistent measure. As the Panel in US – Section 337 noted,
the central phrase in the first sentence of Article XX is that ‘nothing in this Agreement shall be
construed to prevent the adoption or enforcement by any Member of measures . . .’ Measures
satisfying the conditions set out in Article XX are thus permitted, even if they are inconsistent with
other provisions of the GATT 1994. As noted by the Panel in US – Section 337, Article XX
provides, however, for limited and conditional exceptions from obligations under other GATT
provisions. The exceptions are ‘limited’ as the list of exceptions in Article XX is exhaustive. The
exceptions are ‘conditional’ in that Article XX only provides for justification of an otherwise illegal
measure when the conditions set out in Article XX are fulfilled.1
While Article XX allows Members to adopt or maintain measures promoting or protecting other
important societal values, it provides an exception to, or limitation of, affirmative commitments
under the GATT 1994. In this light, it is not surprising that Article XX has played a central role in
many GATT and WTO disputes.
While it could be argued that it is an accepted principle of interpretation that exceptions are to be
construed narrowly (singularia non sunt extendenda) and that Article XX should, therefore, be
construed narrowly, the Appellate Body has not adopted this approach. Instead, it has advocated in
US – Gasoline and US – Shrimp a kind of balancing between the general rule and the exception.
The Appellate Body considers a narrow interpretation of the exceptions of Article XX, i.e. the
exceptions allowing for, inter alia, trade-restrictive measures to protect public health or the

1GATT Panel Report, US – Section 337, United States Section 337 of the Tariff Act of 1930, adopted 7 November,
1989, BISD 36S/345, para. 5.9.
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environment, to be inappropriate. The Appellate Body advocates a balance between trade
liberalisation and other societal values.2
With regard to the kind of measure that can be justified under Article XX, the Panel in US – Shrimp
ruled that Article XX could not justify measures that ‘undermine the WTO multilateral trading
system’3 and that a measure of a Member ‘conditioning access to its market for a given product
upon the adoption by the exporting Member of certain policies’ would undermine the multilateral
trading system.4 On appeal, however, the Appellate Body categorically rejected this ruling by the
Panel on the scope of measures that Article XX could justify. The Appellate Body held that the
measures requiring that exporting countries comply with, or adopt, certain policies prescribed by
the importing country are, in fact, typical of the measures that Article XX can justify. They are
definitely not a priori excluded from the scope of Article XX.
To date, the Appellate Body has yet to rule whether measures that protect, or purport to protect, a
societal value or interest outside the territorial jurisdiction of the Member taking the measure, can
be justified under Article XX. There is no explicit jurisdictional limitation in Article XX. However,
the question is whether there is an implied jurisdictional limitation, in that Article XX cannot be
invoked to protect non-economic values outside the territorial jurisdiction of the Member
concerned. In US – Shrimp, a case involving an import ban on shrimp harvested through methods
resulting in the incidental killing of sea turtles, the Appellate Body noted that sea turtles migrate to
or traverse waters subject to the jurisdiction of the United States.5

II. The two-tier test under Article XX of GATT 1994.

Article XX sets out a two-tier test for determining whether a measure, otherwise inconsistent with
GATT obligations, can be justified. It was stated by the Appellate Body in US – Gasoline Case.6
The two-tier test is as followed:
1. the requirements of one of the exceptions listed in paragraphs (a) to (j) of Article XX; and
2. the requirements of the chapeau of Article XX.

2Appellate Body Report, US – Gasoline, United States – Standards for Reformulated and Conventional Gasoline, WT/
DS2/AB/R, DSR 1996:I, 20, 18.
3Panel Report, US – Shrimp, United States Import of Certain Shrimp and Shrimp Products, WT/DS/58R and Corr.1,
para. 7.44..
4 Ibid, para. 7.45.
5Appellate Body Report, US – Shrimp, United States Import of Certain Shrimp and Shrimp Products, WT/DS/58/AB/
R, DSR 1998 VII, 2821, para. 133.
6Supra note 2.
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In examining whether a measure can be justified under Article XX, one must always examine, first,
whether this measure can be provisionally justified under one of the specific exceptions listed in
paragraphs (a) to (j) of Article XX and, if so, whether the application of this measure meets the
requirements of the chapeau of Article XX.

III. Specific exceptions under Article XX of GATT 1994.

Article XX sets out, in paragraphs (a) to (j), specific grounds of justification for measures which are
otherwise inconsistent with provisions of the GATT 1994. These grounds of justification relate,
inter alia, to the protection of economic and non-economic societal values such as human, animal or
plant life or health, exhaustible natural resources, national treasures of artistic, historic or
archaeological value and public morals. The paragraphs of Article XX contain different
requirements regarding the relationship between the measure at issue and the societal value pursued.
Some measures need to be ‘necessary’ for the protection or promotion of the societal value they
pursue (e.g. the protection of life and health of humans, animals and plants), while for other
measures it suffices that they ‘relate to’ the societal value they pursue (e.g. the conservation of
exhaustible natural resources).

a) Article XX (b): ‘measures necessary to protect human, animal or plant life or health’.
Article XX (b) concerns measures which are ‘necessary to protect human, animal or plant life or
health’. It sets out a two-tier test to determine whether a measure is provisionally justified under this
provision. The Panel in US – Gasoline stated that the United States, as the party invoking Article
XX (b), had to establish:
1. that the policy in respect of the measures for which the provision was invoked fell within the
range of policies designed to protect human, animal or plant life or health; [and]
2. that the inconsistent measures for which the exception was being invoked were necessary to fulfil
the policy objectives.7
The first element of this test under Article XX (b) is relatively easy to apply and has not given rise
to major interpretative problems. In Thailand – Cigarettes, for example, the Panel ruled with regard
to this element of the test under Article XX (b):

7 Supra note 2, para 6.20.

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“the Panel accepted that smoking constituted a serious risk to human health and that consequently
measures designed to reduce the consumption of cigarettes fell within the scope of Article XX(b).”8
In EC – Asbestos, Canada appealed the Panel’s finding that ‘the EC have shown that the policy of
prohibiting chrysotile asbestos implemented by the Decree falls within the range of policies
designed to protect human life or health’.9 However, Canada’s appeal on this point was, in fact, not
related to the Panel’s interpretation of the first element of the Article XX (b) test. Instead, it
challenged the Panel’s assessment of the credibility and weight to be ascribed to the scientific
evidence before it. Canada contested the conclusions drawn by the Panel both from the evidence of
the scientific experts and from scientific reports before it. The Appellate Body, however, rejected
this ground of appeal because it found that the Panel had remained well within the bounds of its
discretion in finding that chrysotile-cement products pose a risk to human life or health.
The policies covered by Article XX (b) include public health policies as well as environmental
policies.
The second element of the test under Article XX (b), the ‘necessity’ requirement, is more
problematic. In Thailand – Cigarettes, the Panel examined whether Thailand’s import prohibition of
cigarettes inconsistent with Article XI of the GATT 1947 was justified under Article XX (b).10
The Panel in Thailand – Cigarettes came to the conclusion that there were in fact various measures
consistent with the GATT which were reasonably available to Thailand to control the quality and
quantity of cigarettes smoked and which, taken together, could achieve the health policy goals
pursued by the Thai government. The import restrictions on cigarettes were therefore not
‘necessary’ within the meaning of Article XX (b).
In short, for the Panel in Thailand – Cigarettes, a measure is ‘necessary’ within the meaning of
Article XX (b) only when there exists no alternative measure that is GATT-consistent or less
inconsistent, and that a Member could reasonably be expected to employ to achieve the public
health objective pursued. It is clear that a Member can only be reasonably expected to employ an
alternative measure when that measure is at least as effective in achieving the policy objective
pursued.
In US – Gasoline, the Panel made an important clarification as to the requirement of ‘necessity’
under Article XX (b): it is not the necessity of the policy objective but the necessity of the disputed

8 GATT Panel Report, Thailand – Cigarettes, Thailand – Restrictions on Importation of and Internal Taxes on
Cigarettes, adopted 7 November, 1990, BISD 37S/200, para. 73.
9 Panel Report, EC – Asbestos, European Communities – Measures Affecting Asbestos and Asbestos-Containing
Products, WT/DS135/R and Add.1, adopted 5 April 2001.
10 Supra note 8.
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measure to achieve that objective which is at issue.11 In this case, the Panel then examined whether
measures existed that were ‘consistent or less inconsistent’ with the GATT 1994 and ‘reasonably
available to the United States to further its policy objectives of protecting human, animal and plant
life or health’.
In EC – Asbestos, a dispute between Canada and the European Communities on the French ban on
asbestos and asbestos products, Canada argued on appeal that the Panel erred in applying the
‘necessity’ test under Article XX (b) of the GATT 1994. In addressing Canada’s arguments in
support of its appeal, the Appellate Body clarified the ‘necessity’ test under Article XX (b) in three
important respects.12
First, the Appellate Body noted that it is for WTO Members to determine the level of protection of
health or the environment they consider appropriate. Other Members cannot challenge the level of
protection chosen; they can only argue that the measure at issue is not ‘necessary’ to achieve that
level of protection.
Secondly, in EC – Asbestos, the Appellate Body clarified the meaning of the requirement,
formulated in Thailand – Cigarettes and US – Gasoline, that there is ‘no alternative to the measure
at issue that the Member could reasonably be expected to employ’. The Appellate Body stated that
in determining whether a suggested alternative measure is ‘reasonably available’, several factors
must be taken into account, alongside the difficulty of implementation. In deciding whether a
measure is necessary, the Appellate Body therefore also considers the importance of the societal
value pursued by the measure at issue, as well as the extent to which the alternative measure will
contribute to the protection or promotion of that value.

Thirdly, instead of the requirement in Thailand – Cigarettes that the alternative measure needs to be
GATT-consistent or less inconsistent, the Appellate Body in EC – Asbestos puts forward another
requirement, namely, that the alternative measure must be less trade-restrictive than the measure at
issue.
The Appellate Body stated with regard to the evaluation of the ‘necessity’ of a measure that:
“In justifying a measure under Article XX (b) of the GATT 1994, a Member may also rely, in good
faith, on scientific sources which, at that time, may represent a divergent, but qualified and
respected, opinion. Member is not obliged, in setting health policy, automatically to follow what, at

11Panel Report, US – Gasoline, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/R,
adopted 20 May, 1996, para. 6.22.
12Appellate Body Report, EC – Asbestos, European Communities – Measures Affecting Asbestos and Asbestos-
Containing Products, WT/DS135/AB/R, DSR 2001: VIII, 3305, para. 168.
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a given time, may constitute a majority scientific opinion. Therefore, a panel need not, necessarily,
reach a decision under Article XX (b) of the GATT 1994 on the basis of the ‘‘preponderant’’ weight
of the evidence.”13

b) Article XX (g): ‘measures relating to the conservation of exhaustible natural

resources.’
Article XX (g) concerns measures relating to the conservation of exhaustible natural resources.
Article XX (g) is fundamentally important because, together with Article XX (b), it permits
measures that depart from core GATT rules for environmental protection purposes. Article XX (g)
sets out a three-tier test requiring that a measure:
* relate to the conservation of exhaustible natural resources;
* relate to the conservation of exhaustible natural resources; and
* be made effective in conjunction with restrictions on domestic production or consumption.
With respect to the first element of the test under Article XX(g), namely, that the measure must
relate to the ‘conservation of exhaustible natural resources’, the Appellate Body, in US – Shrimp,
adopted a broad, ‘evolutionary’ interpretation of the concept of ‘exhaustible natural resources’.
The Appellate Body concluded on the scope of the concept of ‘exhaustible natural resources’:
“Given the recent acknowledgement by the international community of the importance of concerted
bilateral or multilateral action to protect living natural resources, and recalling the explicit
recognition by WTO Members of the objective of sustainable development in the preamble of the
WTO Agreement, we believe it is too late in the day to suppose that Article XX (g) of the GATT
1994 may be read as referring only to the conservation of exhaustible mineral or other non-living
natural resources. Moreover, two adopted GATT 1947 panel reports previously found fish to be an
‘‘exhaustible natural resource’’ within the meaning of Article XX (g). We hold that, in line with the
principle of effectiveness in treaty interpretation, measures to conserve exhaustible natural
resources, whether living or non-living, may fall within Article XX (g).”14
With respect to the second element of the test under Article XX (g), namely, that the measure must
be a measure ‘relating to’ the conservation of exhaustible natural resources, the GATT Panel in
Canada – Herring and Salmon observed that ‘while a trade measure did not have to be necessary or
essential to the conservation of an exhaustible natural resource, it had to be primarily aimed at the

13 Ibid, para. 174.

14 Supra note 5, paras. 129 and 130.
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conservation of an exhaustible natural resource to be considered as ‘‘relating to’’ conservation
within the meaning of Article XX(g).’15
In US – Gasoline, the Appellate Body accepted the Canada – Herring and Salmon interpretation of
‘relating to . . . conservation’ as meaning ‘primarily aimed at conservation’. Applying this test to the
baseline establishment rules for the quality of gasoline, the measure at issue in US – Gasoline, the
Appellate Body held that these rules were ‘primarily aimed at’ the conservation of clean air, an
exhaustible natural resource. According to the Appellate Body, a ‘substantial relationship’ existed
between the baseline establishment rules and the policy objective of preventing further deterioration
of the level of air pollution.16
Also, according to the Appellate Body, in US – Shrimp, Article XX (g) requires ‘a close and real’
relationship between the measure and the policy objective. The means employed, i.e. the measure,
must be reasonably related to the end pursued, i.e. the conservation of an exhaustible natural
resource. A measure may not be disproportionately wide in its scope or reach in relation to the
policy objective pursued.
The third element of the test under Article XX (g), namely, that the measure at issue is ‘made
effective in conjunction with . . . ’, has been interpreted by the Appellate Body in US – Gasoline as
follows:
“the third element of the Article XX(g) test is a requirement of ‘even handedness’ in the imposition
of restrictions on imported and domestic products. Article XX (g) does not require imported and
domestic products to be treated equally: it merely requires that they are treated in an ‘even-handed’
manner.”
If the requirement of ‘even-handedness’ is not met, it is also doubtful whether the measure at issue
meets the ‘primarily aimed at . . .’ requirement of the second element of the Article XX (g) test.
In US – Gasoline, the Appellate Body also stated that it did not believe that the third element of
Article XX(g) was intended to establish an empirical ‘effects test’ for the availability of the Article
XX(g) exception. In a particular case, should it become clear that realistically, a specific measure
cannot in any possible situation have any positive effect on conservation goals, it would very
probably be because that measure was not designed as a conservation regulation to begin with. In
other words, it would not have been ‘‘primarily aimed at’’ conservation of natural resources at all.

15GATT Panel Report, Canada – Herring and Salmon, Canada – Measures Affecting, Exports of Unprocessed Herring
and Salmon, adopted 22 March 1988, BISD 35S/98, paras. 4.5 – 4.6.
16 Supra note 2, 19.
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 IV. The chapeau of Article XX of the GATT 1994.
The legal requirements imposed by the chapeau of Article XX of the GATT 1994 have been highly
relevant in dispute settlement practice. Several of the most controversial decisions by panels and the
Appellate Body have turned on these standards. The chapeau of Article XX, with regard to
measures provisionally justified under one of the paragraphs of Article XX, imposes:
“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.”
The chapeau by its express terms addresses, not so much the questioned measure or its specific
contents as such, but rather the manner in which that measure is applied. It is, accordingly,
important to underscore that the purpose and object of the introductory clauses of Article XX is
generally the prevention of ‘‘abuse of the exceptions of [what was later to become] Article [XX]’’.
This insight drawn from the drafting history of Article XX is a valuable one. The chapeau is
animated by the principle that while the exceptions of Article XX may be invoked as a matter of
legal right, they should not be so applied as to frustrate or defeat the legal obligations of the holder
of the right under the substantive rule of the General Agreement. If those exceptions are not to be
abused or misused, in other words, the measures falling within the particular exceptions must be
applied reasonably, with due regard both to the legal duties of the party claiming the exception and
the legal rights of the other parties concerned.17
In short, the object and purpose of the chapeau of Article XX is to avoid the possibility that the
application of provisionally justified measures would constitute a misuse or abuse of the exceptions
of Article XX.
According to the Appellate Body, a balance must be struck between the right of a Member to invoke
an exception under Article XX and the duty of that same Member to respect the treaty rights of the
other Members. The chapeau was inserted at the head of the list of ‘General Exceptions’ in Article
XX to ensure that this balance is struck and to prevent abuse.
The language of the chapeau makes clear that each of the exceptions in paragraphs (a) to (j) of
Article XX is a limited and conditional exception from the substantive obligations contained in the
other provisions of the GATT 1994, that is to say, the ultimate availability of the exception is
subject to the compliance by the invoking Member with the requirements of the chapeau.18

17 Supra note 2, 22.

18 Supra note 5, para. 157.
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The chapeau of Article XX is an expression of the principle of good faith, a general principle of law
as well as a general principle of international law, which 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’’. An abusive exercise by a Member of its own treaty right thus results in a breach
of the treaty rights of the other Members, and, as well, a violation of the treaty obligation of the
Member so acting.19
The Appellate Body came to the following conclusion in US – Shrimp with respect to the
interpretation and application of the chapeau:
“The task of interpreting and applying the chapeau is, hence, essentially the delicate one of locating
and marking out a line of equilibrium between the right of a Member to invoke an exception under
Article XX and the rights of the other Members under varying substantive provisions (e.g. Article
XI) of the GATT 1994, so that neither of the competing rights will cancel out the other and thereby
distort and nullify or impair the balance of rights and obligations constructed by the Members
themselves in that Agreement. The location of the line of equilibrium, as expressed in the chapeau,
is not fixed and unchanging; the line moves as the kind and the shape of the measures at stake vary
and as the facts making up specific cases differ.”
In short, the interpretation and application of the chapeau in a particular case is a search for the
appropriate line of equilibrium between the right of Members to adopt and maintain trade-restrictive
legislation and measures that pursue certain legitimate societal values or interests and the right of
other Members to trade. The search for this line of equilibrium is guided by the requirements set out
in the chapeau that the application of the trade-restrictive measure may not constitute: either
‘arbitrary or unjustifiable discrimination between countries where the same conditions prevail’; or
‘a disguised restriction on international trade’. The following points examine these requirements of
the chapeau in more detail:

a) ‘Arbitrary or unjustifiable discrimination between countries where the same

conditions prevail’.
For a measure to be justified under Article XX, the application of that measure, pursuant to the
chapeau of Article XX, should not constitute ‘arbitrary or unjustifiable discrimination between

19 Supra note 5, para. 158.

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countries where the same conditions prevail’. In US – Gasoline, the Appellate Body found that the
‘discrimination’ at issue in the chapeau of Article XX must necessarily be different from the
discrimination addressed in other provisions of the GATT 1994, such as Articles I and III. The
chapeau of Article XX does not prohibit discrimination per se, but rather, arbitrary and unjustifiable
discrimination.
Furthermore, the Appellate Body, in US – Gasoline, addressed the meaning of the words
‘discrimination between countries where the same conditions prevail’. The Appellate Body found
that these words refer not only to discrimination between exporting countries where the same
conditions prevail but also to discrimination between an importing country and an exporting
country where the same conditions prevail.20
The Appellate Body in US - Shrimp decided that discrimination may also result when the same
measure is applied on countries where different conditions prevail. When a measure is applied
without any regard for the difference in conditions between countries and this measure is applied in
a rigid and inflexible manner, the discrimination may constitute ‘arbitrary discrimination’ within the
meaning of the chapeau of Article XX.
The extent to which a Member has to seek a multilateral solution to a problem before it may address
the problem by unilateral measures was one of the main issues in US – Shrimp (Article 21.5 –
Malaysia). The Appellate Body made it clear that, in order to meet the requirement of the chapeau
of Article XX, the Member needs to make serious efforts, in good faith, to negotiate a multilateral
solution before resorting to unilateral measures.21 Failure to do so may lead to the conclusion that
the discrimination is ‘unjustifiable’.

b) ‘Disguised restriction on international trade’.

‘‘Arbitrary discrimination’’, ‘‘unjustifiable discrimination’’ and ‘‘disguised restriction’’ on
international trade may, accordingly, be read side-by-side; they impart meaning to one another. It is
clear to us that ‘‘disguised restriction’’ includes disguised discrimination in international trade. It is
equally clear that concealed or unannounced restriction or discrimination in international trade does
not exhaust the meaning of ‘‘disguised restriction’’. We consider that ‘‘disguised restriction’’,
whatever else it covers, may properly be read as embracing restrictions amounting to arbitrary or

20 Supra note 2.

21 Appellate Body Report, US – Shrimp (Article 21.5 – Malaysia), United States – Import Prohibition of Certain Shrimp and
Shrimp Products, Recourse to Article 21.5 of the DSU by Malaysia, WT/DS58/AB/RW, DSR 2001:XIII, 6539, paras. 115–34.
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unjustifiable discrimination in international trade taken under the guise of a measure formally
within the terms of an exception listed in Article XX.22
The kinds of considerations pertinent in deciding whether the application of a particular measure
amounts to ‘‘arbitrary or unjustifiable discrimination’’, may also be taken into account in
determining the presence of a ‘‘disguised restriction’’ on international trade. The fundamental theme
is to be found in the purpose and object of avoiding abuse or illegitimate use of the exceptions to
substantive rules available in Article XX.
A measure which is provisionally justified under Article XX, will be considered to constitute ‘a
disguised restriction on international trade’ if the design, architecture or structure of the measure at
issue reveals that this measure does not pursue the legitimate policy objective on which the
provisional justification was based but, in fact, pursues trade-restrictive, i.e. protectionist,
objectives. Such a measure cannot be justified under Article XX.

V. Scope for Members to Protect other Societal Values.

In two prominent WTO disputes involving the protection of the environment, US – Gasoline and
US – Shrimp, the measures at issue were found provisionally justified under Article XX(g) but the
application of the measures failed to satisfy the requirements of the chapeau of Article XX. The
public perception of the Appellate Body reports in these disputes has been negative and
unsympathetic. In particular, there is a widely held view among environmental activists, that the
WTO undermines necessary environmental legislation. It is noteworthy in this respect that the
Appellate Body, with great foresight, but only with relative success, added a paragraph at the end of
both its report in US – Gasoline and its report in US – Shrimp, explaining, in straightforward
language, the scope for Members to enact environmental legislation and the limited nature of their
rulings in both cases.23

22 Supra note 2, 25.

23 Peter Van den Bossche, “The Law and Policy of the World Trade Organization”.
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 CONCERNS OF DEVELOPING COUNTRIES

The major concern of developing countries in the trade-environment intersection is the trade related
measures being adopted for the enforcement of environmental standards. These standards, as shown
before, are based on pollution and similar process standards and production methods standards.
The use of trade related environmental measures to achieve environmental objectives could be
discriminatory. Developing countries argue that the environmental standards of developed countries
cannot be imposed upon them without considering their socio-economic condition and their level of
economic development. They fear that high-income countries will impose lofty environmental
standards on low income countries, depriving them of one aspect of their natural comparative
advantage and subjecting them to trade barriers if they fail to perform up to the standards of
developed countries.24 Developing countries also argue that the North’s attempts to dictate their
domestic environmental policies by wielding its economic strength through trade sanctions are a
form of eco-imperialism.25 Unilateral sanctions, if unregulated, would fundamentally shift the
trading system towards one based on power rather than on rules. Therefore, the use of trade related
environmental measures for achieving the objective of sustainable development is not desirable.
The fallacy of the environmental effectiveness of trade measures does not pay heed to the concerns
of developing countries or their inability to meet the stricter environmental norms set by the affluent
North. Developing countries have been asking for the necessary financial support and the transfer of
environmentally friendly technology to enable them to tackle environmental issues but the promises
of the North in this regard have not materialised. At present, the acquisition of such technology by
developing countries from the North comes with numerous conditions, as environmentally friendly
technology is transferred from developed countries via official development assistance or through
direct foreign investment. Significantly, however, nearly three quarters of such technology is
obtained by the firms of developing countries on purely commercial terms.
The degree to which environmental issues are required to be addressed should be commensurate
with the level of development of each country. Applying environmental standards to production
processes can be detrimental to the economic interests of developing countries. Allowing countries

24Bhagwati Jagdish, ‘On thinking Clearly about the Linkage between Trade and the Environment’, (2000) 5:4
Environment and Development Economics, 485-96.

25D Hunter, J Salzman, and D Zaelke, International Environmental Law and Policy (1st Ed, 1998) Foundation Press,
New York at 1180.
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to distinguish between products on the basis of how they are produced threatens descent down the
‘slippery slope’ to protectionism which would undermine the very foundation of the international
trade system.
The domineering position of developed countries in GATT/WTO negotiations has been translated
into the systematic bias of trading structures in favour of developed countries. Developing
countries, with their weak bargaining position, have received the tough end of the deal. GATT/WTO
cannot address the goal of sustainable development without the integration of developing countries
into the trading system.
Imbalances in the negotiating position of developing countries and unfairness in the operation and
interpretation of WTO Agreements need to be addressed. As outlined in the earlier sections, the
issues of trade-environment intersections should be considered to assist developing countries to
pursue policies for sustainable development. The situations of developing countries need to be
considered as a priority in the Agreements on Agriculture, Textiles and Clothing, TRIPs and GATS.

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 CONCLUSION

Trade is powerful engine for the economic growth that is vital to the creation of conditions which
favour improving social conditions and advancing environmental protection. Trade liberalisation
can therefore be an important contributor to sustainable development, especially when implemented
in conjunction with complementary environmental policies. In this light, striving for an open
international trading system may be an important instrument for the protection of the global
environment. The Principle 12 of the Rio Declaration has emphasised that the mutual coexistence of
trade and environment will promote sustainable development.26
For this to happen there should be a reconciliation of economic comparative advantage and
environmental comparative advantage. Resource and environmental costs need to be incorporated
into the prices of products. Such prices should then provide clear signals to producers and
consumers in order to guide their decisions and to enable an efficient and sustainable allocation. In
this process the special factors affecting environment and trade policies in developing countries and
their significant economic and developmental differences should be borne in mind.
This project has outlined the need for GATT/WTO to clarify and/or modify some of its rules if it is
to better accommodate the concerns of developing countries and environmentalists. As illustrated
by the examples examined above, an important step in this regard would be the revision of GATT
Article XX so that it provides better support for the achievement of environmental goals, ensures
that environment-related trade measures do not constitute disguised protectionist measures and
takes account of the special situations of developing countries.
In the meantime, insufficient attention has been given to environmental considerations, as illustrated
by the cases brought before the GATT dispute settlement panels. A review of the relevant GATT
rules should ensure that a balance is struck between competing commercial and environmental
goals and that global and transboundary environmental issues are accommodated. GATT must also
address doubts regarding the conformity of the measures set out in Multilateral
Environmental Agreements (MEAs).
The trade-environment debate is largely entwined with the declining terms of trade and the sluggish
economic growth in developing countries. The use of trade policy measures to enforce
environmental policies should be non-discriminatory, least trade restrictive, transparent, should
provide adequate notification of national regulations and should consider the special conditions and

26 Rio Declaration on Environment and Development, June 14, 1992, 31 ILM 874 (1992).
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developmental requirements of developing countries. However, seeking environmental solutions by
restricting trade will further threaten the prospects of sustainable development in developing
countries. Free trade is not an end in itself; it is a means to achieve economic and environmental
efficiency.

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 BIBLIOGRAPHY

GATT Panel Reports

GATT Panel Report, Canada – Herring and Salmon, Canada – Measures Affecting, Exports of

Unprocessed Herring and Salmon, adopted 22 March 1988, BISD 35S/98, paras. 4.5 – 4.6...12

GATT Panel Report, Thailand – Cigarettes, Thailand – Restrictions on Importation of and Internal

Taxes on Cigarettes, adopted 7 November, 1990, BISD 37S/200, para. 73. ...............................9

GATT Panel Report, US – Section 337, United States Section 337 of the Tariff Act of 1930, adopted

7 November, 1989, BISD 36S/345, para. 5.9. .............................................................................6

Appellate Body Reports

Appellate Body Report, EC – Asbestos, European Communities – Measures Affecting Asbestos and

Asbestos-Containing Products, WT/DS135/AB/R, DSR 2001: VIII, 3305, para. 168. ............10

Appellate Body Report, US – Gasoline, United States – Standards for Reformulated and

Conventional Gasoline, WT/DS2/AB/R, DSR 1996:I, 20, 18. ...................................................7

Appellate Body Report, US – Shrimp (Article 21.5 – Malaysia), United States – Import Prohibition

of Certain Shrimp and Shrimp Products, Recourse to Article 21.5 of the DSU by Malaysia, WT/

DS58/AB/RW, DSR 2001:XIII, 6539, paras. 115–34. ..............................................................16

Appellate Body Report, US – Shrimp, United States Import of Certain Shrimp and Shrimp

Products, WT/DS/58/AB/R, DSR 1998 VII, 2821, para. 133. ....................................................7

WTO Panel Reports

Panel Report, EC – Asbestos, European Communities – Measures Affecting Asbestos and Asbestos-

Containing Products, WT/DS135/R and Add.1, adopted 5 April 2001. .....................................9

Panel Report, US – Gasoline, United States – Standards for Reformulated and Conventional

Gasoline, WT/DS2/R, adopted 20 May, 1996, para. 6.22. ........................................................10

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Panel Report, US – Shrimp, United States Import of Certain Shrimp and Shrimp Products, WT/DS/

58R and Corr.1, para. 7.44.. .........................................................................................................7

Other Authorities

Bhagwati Jagdish, ‘On thinking Clearly about the Linkage between Trade and the Environment’,

(2000) 5:4 Environment and Development Economics, 485-96. ..............................................18

D Hunter, J Salzman, and D Zaelke, International Environmental Law and Policy (1st Ed, 1998)

Foundation Press, New York at 1180.........................................................................................18

Peter Van den Bossche, “The Law and Policy of the World Trade Organization”. .......................17

Rio Declaration on Environment and Development, June 14, 1992, 31 ILM 874 (1992). ...........20

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