WTO and Trips
WTO and Trips
WTO and Trips
Analysing the Necessity Requirement of Article XX(b), with the ‘Related to’
requirement of Article XX(g)
The substance of this paper will primarily be sourced from reports of the Appellate Body, the
Panel Reports, as well as reviews of the same. Multiple articles from various authors will also
be referred to as a source of information regarding the mandate of the WTO. A few criticisms
and papers written on the subject of the relationship between trade and environment will also
be referred to. Online books and journals will serve as material to assess the functioning of the
necessity test in India and other developing countries.
RESEARCH QUESTIONS
Q1. How does the WTO balance the liberalisation of trade with the protection of the
environment?
Q2. What is the ‘necessity’ test under Article XX(b) and the ‘related to’ test Article XX(g)?
Q3. What is the difference of threshold accorded to Article XX(b) and Article XX(g)?
Q3. What are the implications on India and other Developing Countries with regard to these
exceptions?
2
TABLE OF CONTENTS
I: Introduction ............................................................................................................................ 4
VIII: The case of study of alphonso mangoes for understanding the implications on India ... 19
Bibliography ............................................................................................................................ 27
3
I: INTRODUCTION
Without exceptions, a country couldn’t prohibit trade of goods which could perhaps
infringe on national security. Without exceptions, there could be conflict of international laws:
e.g. a country would not be allowed to prevent trade in endangered species. In order to avoid
such situations, it was decided that an exception clause should be present in the General
Agreement on Trade and Tariffs, 1994 [hereinafter “GATT”] that would permit Members of
the World Trade Organization [hereinafter “WTO”] to adopt policies that might not be in
complete conformity with the GATT principles.
Accordingly, Article XX of the GATT, lists down the certain specific policy exceptions
that may warrant trade restrictive and WTO inconsistent measures. The only restriction on
these measures exists in the form of the chapeau to Article XX, which requires that such
measures must be taken in a non-discriminatory and non-arbitrary manner.
1. first, that its measure falls under at least one of the exceptions (e.g. paragraphs (b) to
(g), of the ten exceptions under Article XX) and,
2. second that the measure satisfies the requirements of the introductory paragraph (the
“chapeau” of Article XX), i.e. that it is not applied in a manner which would constitute
“a means of arbitrary or unjustifiable discrimination between countries where the same
conditions prevail”, and is not “a disguised restriction on international trade”
The Appellate Body in US – Wool Shirts and Blouses1asserted that Article XX contains
“limited exceptions from obligations under certain other provisions of the GATT 1994, not
positive rules establishing obligations in themselves”. Such provisions are invoked by the party
complained against and are considered by the panel only once it has determined a violation of
some other provisions.
Over the years, there have been numerous disputes before the WTO adjudicatory bodies
that centred on Article XX of the GATT. In fact, majority of the disputes before the Panel and
Appellate Body have involved the invocation of Article XX. One of the exceptions provided
1
US – Wool Shirts and Blouses, Appellate Body Report, in DSR 1997,volume 1, Geneva, 2000, p. 335.
4
in the list of acceptable exceptions is the “relating to” exception. Encapsulated in Article XX
(c), (e) and (g), the “relating to” exception allows restrictions on trade which pertain to gold,
silver, products of prison labour and conservation of exhaustible natural resources. However,
the difficulty arises in determining when exactly is the test of “relating to” is satisfied.
The second exception is the one pertaining to “necessity.” This is enshrined under
Article XX clause (a), (b) and (d) and requires that any trade restrictive measure must be
necessary for the Member State to achieve its goal. The term ‘necessary’ in GATT and WTO
jurisprudence has had a long and controversial history.2
In light of this, two issues have emerged; first the conception of what constitutes related
to under Article XX and what constitutes necessity. The second issue that has emerged through
the various disputes surrounding Article XX of GATT, is the growing number of disputes that
involve environmental considerations such as protection of tuna stock, prohibiting air
pollution, securing the health of the population and preservation of endangered species such as
dolphins and shrimp turtles.
Through this project the concept of “relating to” and “necessity” and their parameters are
explained for allowing restrictive trade practices with a focus on the environment. Later, the
environmental aspects and implications of Article XX are discussed.
The drafters of the GATT recognised that although trade is important, governments
have varied policy goals and must be given the freedom to pursue these.3 Consequently, Article
XX was adopted, embodying certain general exceptions that can be invoked by Members to
protect interests of public policy, protection of human, animal or plant life, public health, or
the conservation of exhaustible natural resources to name a few.4In this context, Article XX
provides an exhaustive list of circumstances, which allow members of the World Trade
Organisation [‘WTO’] to adopt measures that are inconsistent with obligations under the WTO
on grounds of the necessity of such measures.5
2
Dispute Settlement Commentary for Appellate Body Report, Brazil-Measures Affecting Imports of
Retreaded Tyres, 12, WT/DS332/AB/R (2007).
3
SIMON LESTER, WORLD TRADE LAW: TEXT, MATERIALS AND COMMENTARY, 382 (2008).
4
Jan Klabbers, Jurisprudence in International Trade Law Article XX of GATT, 26 J. World Trade, 64
(1992)[hereinafter ‘Jurisprudence of Article XX’].
5
JOHN H. JACKSON, WORLD TRADE AND THE LAW OF GATT, 742 (1969).
5
The importance of this provision was discussed by the WTO Secretariat through its
2003 Working Party Note. The Secretariat stated that Article XX reflects the balance in WTO
agreements between two important goals; first, preserving the freedom of Members to set and
achieve regulatory objectives through measures of their own choice, and second, discouraging
Members from adopting or maintaining measures that unduly restrict trade.6 This balance is
attained by ensuring that the trade restrictive measure is necessary to achieve the Member’s
policy objective.7
The term ‘necessary’ in GATT and WTO jurisprudence has had a long and
controversial history.8Therefore, to appreciate in what situations such an exception can be
invoked let us understand through the next section, how this term has been interpreted through
various cases, all of which examine the content and scope of Article XX of GATT.
Initially, in the year 1982, in the case of United States – Importation of Certain
Automotive Spring Assemblies, the Panel tied the condition of necessity to an examination of
whether a satisfactory and effective alternative existed.9 Thus, the term necessary as used in
sub-paragraphs (a), (b) and (d) of Article XX, was understood as adopting the “minimum
derogation principle.10 However, over the years varying interpretations of the term ‘necessary’
have been made by the Panel and the Appellate Body. Let us discuss a few of these cases
briefly:
In this case, certain provisions of the 1990 Clean Air Act were challenged by Brazil
and Venezuela on grounds that they discriminated against importers of foreign gasoline. The
United States attempted to justify these measures under subsections (b), (d) and (g) of GATT
Article XX.11 In doing so, the Panel laid down a three part test that the US had to be fulfil in
order to justify its measure under Article XX:
6
WTO, Note by the Secretariat, Necessity Tests in the WTO, (2003).
7
Id.
8
Dispute Settlement Commentary for Appellate Body Report, Brazil-Measures Affecting Imports of Retreaded
Tyres, 12, WT/DS332/AB/R (2007).
9
United States – Importation of Certain Automotive Spring Assemblies,BISD 30S/ 107-128 (L/5333) (1982).
10
KEVIN C. KENNEDY, INTERNATIONAL TRADE REGULATION 270 (Vicki Been et al. eds., Aspen 2009).
11
Panel Report, United States-Standards for Reformulated and Conventional Gasoline, ¶¶ 6.4(b), WT/DS2/R (Jan.
29, 1996).
6
(1) That the policy in respect of the measures for which the provision was invoked fell
within one of the sub-paragraphs;
(2) that the measures were applied in conformity with the requirements of the introductory
clause of Article XX,12 which acts as a good faith requirement to prevent the abuse of
the Article XX exceptions.13
Further, the Appellate Body also concluded that under Article XX of GATT, it is not
the discriminatory aspect of the measure that must be necessary, but the measure in itself. We
will discuss this case in greater detail in the next part of the project, where I will discuss more
specifically sub-paragraphs (b) and (g) of Article XX.
In this case the United States and Australia claimed that Korea’s dual retail system for
sales of domestic and imported beef violated Article III of GATT which called for non-
discrimination. On the other hand, Korea argued that its measures were necessary under Article
XX(d), to assure compliance with its own Unfair Competition Act.14
The Appellate Body noted that the term ‘necessary’ can denote different types of
necessities.15 The determination of whether a measure was 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.16
Not only the weighing and balancing criteria the Appellate Body also noted that a
necessary analysis would include “the determination of whether a WTO-consistent alternative
measure which the member concerned could ‘reasonably be expected to employ’ is available,
or whether a less WTO-inconsistent measure is ‘reasonably available.’”17 However, at this
12
Id at 6.20.
13
Dispute Settlement Commentary for Appellate Body Report, U.S.-Standards for Reformulated and
Conventional Gasoline, at 22, WT/DS2/AB/R (2001).
14
Panel Report, Korea-Measures Affecting Imports of Fresh, Chilled and Frozen Beef, ¶ 614, 645
WT/DS161,169/R (July 31, 2000).
15
Korea –Beef, Appellate Body Report ,WT/DS161/AB/R, WT/DS169/AB/R, ¶ 160-161.
16
Id ¶164.
17
Id. ¶ 166 (quoting Panel Report, United States – Section 337 of the Tariff Act of 1930, ¶ 5.26, L/6439 (Nov. 7,
1989), GATT B.I.S.D. (36th Supp.) at 345 (1989).
7
point it was not clear what type of proposal would suffice as a reasonably available alternative
and it was also unclear as to who would bear the burden of proving the existence of available
alternative measures.18 The Appellate Body merely clarified that when seeking to identify
measures as WTO incompatible, the Body will scrutinise the Member’s behaviour in like
situations. If a Member has adopted a WTO-consistent measure in similar situations, this may
be an indicator that a reasonably alternative measure that is WTO consistent exists.19
Thus, by advocating a weighing and balancing of various factors, the ruling in this case,
can be considered the first WTO ruling to introduce certain relaxing elements into the necessity
test.20 The Body has not created a closed list of relevant factors but has stressed three: the
effectiveness of the measure in protecting the value, the trade restrictiveness of the measure
and the importance of the value to be protected. The balancing of these three factors determines
whether the WTO Member could “reasonably be expected to employ” an alternative GATT-
consistent or less inconsistent measure.21
This was a case brought by Canada against the European Communities for the existence
of the French ban on the import and domestic production of asbestos and asbestos-containing
products.22 The European Communities stated that the French ban was necessary to preserve
human life and health in light of Article XX, sub-paragraph (b). I will be discussing this case
in greater detail in the next part of this project which focuses on the inter-relationship between
the environment and the exceptions under Article XX. However, pertaining to the general
conception of necessity, the Panel and Appellate Body first analysed the existence of
“reasonably available alternative measures.”23 In this context, it was held that under the WTO
members had the right to determine the level of protection that they consider appropriate,24 and
18
Christopher Doyle, The Necessary Element of GATT Article XX in the Context of the China-Audiovisual
Products Case, 29 Boston Univ. Int'l L. J. 155 (2011)[hereinafter ‘Necessary Element of GATT’].
19
Appellate Body Report, Korea – Beef , ¶ 170-172.
20
G. Marceau, Conflicts of Norms and Conflicts of Jurisdictions—The Relationship Between WTO Agreement
and MEAs and Other Treaties, 35 J.W.T. 6 (December 2001), 1081–1131, at 1098.
21
Jan Neumann, Necessity Revisited: Proportionality in World Trade Organisation After Korea-Beef, EC-
Asbestos and EC Sardines, 37(1) J. World Trade 230 (2003).
22
Appellate Body Report, European Communities-Measures Affecting Asbestos and Asbestos-Containing
Products, ¶ 1-3, WT/DS135/R (Mar. 12, 2001).
23
Id. ¶ 84, 86.
24
Panel Report, United States-Measures Affecting the Cross-Border Supply of Gambling and Betting Services, ¶
6.461, WT/DS285/R (Nov. 10, 2004).
8
the burden to suggest an alternative measure lay on the complainant who had the additional
duty to propose an alternative that allowed the proponent to achieve its desired level of
protection.25 Thus, this case went ahead and clarified certain ambiguities that were left by the
Korea-Beef case.
This dispute involved three U.S. laws that were alleged to operate as a prohibition of
Antiguan offshore gambling service providers in violation of GATS article XVI (a most-
favoured-nation provision).26 The United States in response contended that its measures were
necessary to protect public morals under GATS Article XIV(a), which according to the Panel
was not a bar to use precedents set under GATT Article XX as the provision under GATS was
similar to sub-paragraph (a) of GATT Article XX.27
The Appellate Body found that to understand the necessity of any measure the
importance of the interests at stake must be examined and then other factors must be weighed
and balanced.28 This was aimed at clarifying several factors as suggested through the Korea
Beef case. Further, the Appellate Body noted two primary factors to be weighed against the
importance of the interests. First is “the contribution of the measure to the ends pursued by
it.”29 The second factor weighs “the restrictive impact of the measure on international
commerce.”30
Further, this judgment also contributed to the determination of the burden of proof
associated with the reasonably available alternative test. The Appellate Body, noted that:
“[i]t is not the responding party’s burden to show in the first instance that there are no
reasonably available alternatives to achieve its objectives. Instead, the responding
party should make a prima facie case that the measures are necessary. The complaining
party may then present WTO-consistent alternative measures. Once alternatives are
25
Necessary Element of GATT at 156.
26
Panel Report, United States-Measures Affecting the Cross-Border Supply of Gambling and Betting Services, ¶
6.535, WT/DS285/R (Nov. 10, 2004).
27
Id at. ¶ 6.475.
28
Appellate Body Report, United States – Measures Affecting Cross-Border Supply of Gambling and Betting
Services, ¶ 306, WT/DS285/AB/R.
29
Ibid.
30
Ibid.
9
presented, the burden shifts back to the responding party to demonstrate why the
proposed alternatives are not reasonably available.31
Additionally, the Appellate Body also held that a suggested alternative measure might
not qualify as reasonably available for two reasons. First, if it places an undue burden on the
responding member, and second if it does not allow the responding party to achieve its desired
level of protection with respect to the objective pursued.32 Thus, this case served as a landmark
in clarifying the conception and circumstances that warrant the invocation of the necessity
exception under Article XX of GATT.
The case also discussed the step-by-step process in assessing the validity of a necessary
measure as well as the adoption of a reasonably available alternative.
31
Id at ¶ 309, 310, 311.
32
Id at ¶ 304.
33
Appellate Body Report, Brazil-Measures Affecting Imports of Retreaded Tyres, ¶ 178, WT/DS332/AB/R (Dec.
3, 2007).
10
doing so, the Panel laid down a three-part test that the US had to be fulfilled in order to justify
its measure under Article XX:
(1) That the policy in respect of the measures for which the provision was invoked fell
within one of the sub-paragraphs;
(2) that the measures were applied in conformity with the requirements of the introductory
clause of Article XX, which acts as a good faith requirement to prevent the abuse of the Article
XX exceptions.
Further, the Appellate Body also concluded that under Article XX of GATT, it is not
the discriminatory aspect of the measure that must be necessary, but the measure in itself.
Article XX (g) provides for an exception for measures relating to the conservation of
exhaustible natural resources if such measures are made effective in conjunction with
restrictions on domestic production or consumption. It is pertinent to note that this provision
does not apply generally to environmental protection. However, given the world’s increasing
reliance on natural resources, persistent need for their trade and their depleting reserves, Article
XX (g) has acquired a central role in harmonizing free trade and protection of the environment.
The scope and ambit of Article XX(g) is very broad. Most of the world's serious
environmental issues such as climate change, driftnet fishing, waste dumping, and bio-diversity
can be viewed as natural resources lacking conservation.
This Article has been invoked nine times before the Panel and Appellate Body, yet
despite these repeated occurrences, neither a uniform definition nor a sufficiently clear scope
of the term exhaustible natural resources has been produced. Given the vagueness of
exhaustible natural resources of GATT Article XX (g) this term is to be interpreted in WTO
dispute settlement on a case to case basis. It has been argued previously that the term
‘exhaustible’ natural resource should mean finite resources such as metals and minerals and
not biological or renewable resources like animal, plants, soil or water, as they were limited in
supply and could be depleted as consumed. However, the Appellate Body in the US-Shrimp
case found that the term exhaustible natural resource was not static in its content but was rather
evolutionary. Therefore, it was in this light that this term was found to include both living and
non-living resources. Thus, it is due to this reason that resources like tuna stock and salmon
have found to constitute exhaustible natural resources under Article XX (g).
11
Further, the US-Shrimp case also laid down a three-step analysis that is essential to
establish a claim under Article XX (g) of GATT:
(1) Whether the measure is concerned with the conservation of ‘exhaustible natural resources’
within the meaning of Article XX(g)
(2) Article XX(g) requires that the measure sought to be justified be one which ‘relates to’ the
conservation of exhaustible natural resources;
(3) Whether the measure at issue is in conjunction with restrictions on domestic consumption.
The important disputes under Article XX (g) of GATT are the issues concerning US-
Tuna, Canada-Herring and Salmon, US-Tuna Dolphins, US-Shrimp, and US Gasoline, all of
which we will discuss in the section to follow.
Article XX has been considered pivotal to the intersection between international trade
and environment.34Interpretation by the Panel and Appellate Body has rendered Article XX
central to the effort to carve out a space for the environment under GATT.35 This is mainly
through sub-paragraphs (b) and (g) to Article XX. Article XX(b) allows Members to take
measures “necessary to protect human, animal or plant life or health." On the other hand,
Article XX(g) allows for a country to take measures "relating to the conservation of exhaustible
natural resources if such measures are made effective in conjunction with restrictions on
domestic production or consumption.” These measures are permissible so long as they do not
"constitute a means of arbitrary or unjustified discrimination between countries where the same
conditions prevail, or a disguised restriction of international trade."36
Article XX sets out a number of specific policy goals that may be used to justify
measures that violate the substantive obligations of the GATT. Through the present section,
we shall discuss the objectives specific to environmental concerns, by means of sub-paragraphs
(b) and (g) of Article XX.
34
BRADLY J. CONDON, ENVIRONMENTAL SOVEREIGNTY AND THE WTO: TRADE SANCTIONS
AND INTERNATIONAL LAW 78-81 (2006).
35
Bruce Neuling, The Shrimp-Turtle Case: Implications for Article XX of GATT and the Trade and Environment
Debate, 22 Loy. L.A. Int'l & Comp. L. Rev 13 (1999)[hereinafter ‘Trade and Environment Debate’].
36
Vinod Rege, GATT Law and Environment-Related Issues Affecting the Trade of Developing Countries, 28 J.
of World Trade, 117 (1994).
12
13
VI: CONTRAST BETWEEN NECESSARY AND RELATING TO STANDARDS
After examining sub-paragraphs (b) and (g) of Article XX, one very important question
arises, one which I seek to explore through this section; that of the difference between wording
of the two provisions. Thus, I shall now examine what is the meaning of sub-paragraph (b),
which uses the word ‘necessary’, and sub-paragraph (g), which uses ‘relating to’ in listing its
policy exception. The usage of different terms indicates the existence of a legislative intent
which seeks to differentiate two situations. Let us now understand how these two terms have
been interpreted and applied through practice of the World Trade Organisation.
The interpretation of the term necessary has been more complex and also quite
controversial. In the US-Section 337 GATT Panel Report, adopted in 1989, the panel
interpreted this requirement as follows in the context of Article XX(d):
‘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. This statement reflects the
traditional GATT interpretations, that a measure is not necessary if there is a
reasonably available alternative measure that leads to a lesser degree of inconsistency
with GATT rules.’37
Thus, according to the panel in this case the rule was that a measure is not necessary if
there is a reasonably available alternative measure that is less inconsistent with the GATT. A
strict application of this approach can serve as extremely problematic as there will often be
alternative measures that could have been taken. Thus, under this standard only a few measures
would qualify as necessary, as a result of which numerous environmentalists groups and
NGO’s have voiced their concerns opining that the Article XX exception would be impossible
to satisfy.
In light of this, the Appellate Body has since taken the US-Section 337 panel’s
statements and modified them to induce more flexibility to take into account non-trade
37
GATT Panel Report, US-Section 337, ¶5.26.
14
concerns such as the protection of the environment. This issue was first addressed through the
case of Korea-Beef before the Appellate Body. Through this case the Appellate Body has laid
down the following three factors to determine whether a measure is necessary38:
1. The contribution made by the compliance measure to the enforcement of the law or
regulation at issue.
2. The importance of the common interests or values protected by the law or
regulation; and
3. The accompanying impact of the law or regulation on imports or exports.
However, to some extent, these factors seem to be part of the traditional test under US-
Section 337 case. The only new addition was factor number two which was likely to have been
added to ensure a degree of flexibility to the exceptions under Article XX.39 As a result the
precise test to be applied for the necessary standard is still unclear, in particular the extent to
which the inquiry should focus on whether an alternative measure should have been used.
However, the Appellate Body clarified its stance on what actually constitutes necessity
in the case of US-Gambling as has already been discussed in the preceding sections. The Body
referring to the holding of Korea-Beef stated that ‘it is on the basis of weighing and balancing
and comparison of measures, taking into account the interests or values at stake, that a panel
determines whether a measure is necessary or alternatively, whether another, WTO-consistent
measure is reasonably available.’40 In establishing a measure as necessary, the Appellate Body
noted, the respondent party may point out why alternative methods would not achieve the same
objective as the challenged measure, but it is under no obligation to do so in the first instance.
Thus, as seen through this brief analysis as well as the preceding section that focussed
specifically on the test of necessity under GATT, necessity of a measure under Article XX (b),
is a high standard to prove, one that must be examined keeping in mind the crucial interests
involved, the likelihood of comparatively less trade restrictive measures, the impact on
commercial trade, as also the ability of the responding State to undertake another alternative
measure.
On the other hand, Article XX (g) provides an exception for measures ‘relating to the
conservation of exhaustible natural resources’. The first application of the ‘relating to’ clause
38
Appellate Body Report, Korea-Beef, at ¶ 164.
39
SIMON LESTER ET. ALL., WORLD TRADE LAW: TEXT, MATERIALS AND COMMENTARY, 385.
40
Appellate Body Report, US-Gambling, ¶ 304-309.
15
was made in the Canada – Salmon and Herring case. The panel decided to examine the meaning
of ‘relating to’ in the light of the context in which Article XX(g) appears in the GATT and of
the purpose of that provision. It noted that:
“[S]ome of the subparagraphs of Article XX state that the measure must be 'necessary'
or 'essential' to the achievement of the policy purpose set out in the provision (cf.
subparagraphs (a), (b), (d) and (j)) while subparagraph (g) refers only to measures
'relating to' the conservation of exhaustible natural resources. However, as the
preamble of Article XX indicates, the purpose of including Article XX(g) in the General
Agreement was not to widen the scope for measures serving trade policy purposes but
merely to ensure that the commitments under the General Agreement do not hinder the
pursuit of policies aimed at the conservation of exhaustible natural resources. The
Panel concluded for these reasons 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 conservation of an exhaustible natural resource to be
considered as relating to conservation within the meaning of Article XX(g)”41
The panel introduced thereby the interpretation that the measure had to be primarily
aimed at and not necessary or essential.42
41
Canada – Salmon and Herring, Panel Report, ¶ 4.6.
42
Dispute Settlement Practice, at p. 17.
16
VII: JURISPRUDENCE OF NECESSITY IN THE CONTEXT OF DEVELOPING NATIONS
Having understood the general conception of the test of ‘necessity’ under Article XX,
its jurisprudential development and relationship with the environment, through the present
section, I will address the implications of invoking necessity as an exception against and by
developing countries.
Over the years, the major concern of developing countries in the trade-environment
intersection has been the trade related measures being adopted for the enforcement of
environmental standards. These standards are based on process standards and production
method standards, something that varies greatly between developing and developed
countries.43 Thus, the use of trade-related environmental measures to achieve environmental
objectives could be discriminatory. Many developing countries, such as Brazil, India and Sri
Lanka have often argued that the environmental standards of developed countries must not be
imposed upon them without considering their socio-economic condition and their level of
economic development, especially in context of the policy exceptions under Article XX. The
stage of economic development a country is in, the nature of the available technological
infrastructure, and the paucity of resources are all issues that developing countries face and
therefore, there is bound to be a difference in domestic preference regarding the environment
quality and policy.44
However, there has been no respite for developing countries in this context. Almost all
the disputes under Article XX of GATT have been brought by developed countries like the
United States and European Communities against developing countries such as Mexico, and
Thailand. This is indicative that in world trade today, high-income countries impose lofty
environmental standards on low income countries, depriving them of their natural comparative
advantage and subjecting them to trade barriers. In fact, it is due to this reason, that
environmental policy considerations have been considered a non-tariff barrier to free trade by
developing countries.45 Even the Panel of the WTO had warned against the use of such
protectionist measures by developed countries against developing countries in the US-Mexico
43
ShawkatAlam, Trade-Environment Nexus in GATT Jurisprudence: Pressing Issues for Developing Countries,
17 Bond L. Rev. 4 (2005)[hereinafter ‘Pressing Issues for Developing Countries’].
44
Vinod Rege, GATT Law and Environment-Related Issues Affecting the Trade of Developing Countries, 28 J.
of World Trade 112 (1994)[hereinafter ‘GATT Law and Environment-Related Issues Affecting the Trade of
Developing Countries’].
45
Bhagwati Jagdish, 'On thinking Clearly about the Linkage between Trade and the
Environment' 5:4ENVIRONMENT AND DEVELOPMENT ECONOMICS, (2000).
17
Tuna dispute. The Panel found that the U.S. could not apply its own standards to tuna fishing
in Mexico as a necessary measure under Article XX (b) of GATT, as this would be imposing
an undue hardship upon the interests of Mexico.46
Thus, 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. In fact, authors have gone so far to hold that by allowing countries 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.47In this light of argument, an encouraging trend towards the integration of trade,
environment and the interests of developing countries has been the case of Brazil Retreaded
Tyres. As has been discussed this was the only case where a trade restrictive measure to protect
a Member’s environment was taken by a developing country as against the developed
countries. All previous WTO trade-environment disputes had either pitted developed countries
against each other or had involved developing country challenges against developed country
members. This jurisprudence reinforced the perception that only developed countries introduce
trade-restrictive measures that are purportedly necessary to protect the environment and that
reflect, in part, those countries' high prioritization of the environment in their public policy.
However, with Brazil Retreaded Tyres, the world trading community realised that not only was
environment a public policy ground that could be successfully invoked by developing
countries, but also that the over-protectionist attitude of the developed countries would now be
challenged and balanced by growing advances of the developing countries.
46
GATT Law and Environment-Related Issues Affecting the Trade of Developing Countries, at p. 119.
47
D HUNTER, J SALZMAN, AND D ZAELKE, INTERNATIONAL ENVIRONMENTAL LAW AND POLICY (1st Ed, 1998)
Foundation Press, New York at 1188.
48
Pressing Issues for Developing Countries at p. 6.
18
beset with numerous pre-conditions environmentally-friendly technology is transferred from
developed countries via official development assistance or through direct foreign investment.
Therefore, positive and effective alternatives to trade sanctions, such as market access
and/or financial and technical cooperation, should be considered. Differences in environmental
standards should be borne in mind in the context of the historical process of production and the
present inequities between developed and developing countries. Using trade restrictions to
force developing countries to comply with developed environmental standards is not the
panacea for the issue of sustainable development. Instead, developing countries should be
given access to sophisticated environmental technology, technical and political support and
funding commitments from the international community to build their capacity for sustainable
development.49Moreover, as the US-Mexico tuna dispute held, Members must carry out
negotiations of international cooperation arrangements to reconcile free trade and protection of
environment as objectives under the GATT.50Though these negotiations are time consuming
and often involve complex issues, they nonetheless help synthesise the interests of developed
and developing countries without the escalation of issues and severing of political ties.
Having understood the general context of the position of developing countries in the
invocation of general exceptions pertaining to the environment under Article XX (b) and (g)
let us now take a more specific instance; that of the ban imposed by the European Union on
import of Alphonso mangoes from India. Even though this instance did not snowball into a
full-fledged dispute and in fact the ban was lifted within seven months, this proves as an
interesting case study in examining how Article XX would have played out, if invoked in the
real time instance.
India is one of the largest producer of mangoes in the world. Naturally, it is also the
largest exporter of various varieties of mangoes, and more specifically, the 28 member
European Union imports all of its Alphonso mangoes produce from India. Despite this, on 1st
May, 2014, the European Union imposed a ban on the import of Alphonso mangoes from India.
This ban was imposed as a result of the decision of the Standing Committee on Plant Health
49
Id at p. 7.
50
Steve Charnovitz, 'Trade Negotiations and the Environment' (1992)International Environment Reporter,
March11, 144-145.
19
set up by the EU, which found that 207 consignments of fruits and vegetables from India, were
found to be contaminated by pests such as fruit flies and other quarantine pests. This temporary
ban was imposed by the EU stating that these fruit flies and pests threatened other plant life
and agricultural produce in EU as the flies caused produce to rot and reducing their life and
utility. Moreover, these flies may also potentially impact the health of humans who consume
such products. The EU argued that the ban was necessary to tackle significant shortcomings
in the sanitary certification system of such mangoes exported to the EU.
Even though the claim of necessity of measure as required under Article XX (b) for the
protection of plant, animal and human health was never raised by the EU. It is my submission
that even if it did do so, the claim would not have been successful based on the existing
jurisprudence in context of Article XX (b). I argue this for a number of reasons.
First, to address the chapeau of Article XX which requires that any trade restrictive
measure must be taken in a manner that is not arbitrary and not discriminatory. Now, the mango
ban was imposed exclusively on India based on the manner of their production, while many
other exporters of mangoes such as Pakistan, Malaysia and Thailand produce mangoes in
similar conditions. Mangoes from these countries as well are exported to EU and yet, such a
ban was imposed only on India. In fact, there are countries in Africa and Asia where cultivation
and packaging process of imported mangoes are far worse than India and therefore, by singling
out India, the EU has demonstrated an unbalanced and discriminatory attitude in violation of
the chapeau of Article XX.
Second, in context of whether the ban on mangoes was necessary to protect the plant
and human health in the EU. In my opinion it was not. To address this aspect, I will first address
whether there was a need to ban the mangoes and second, whether there could be any
alternative measures that could have been taken by the EU. In context of the first sub-issue, the
EU had not actually established any statistical analysis, research conclusions and actual
causative link between the presence of a few fruit flies and harm that may hypothetically be
caused to agricultural produce and human health by the import of mangoes from India. It was
held in the Thailand Cigarettes dispute certain evidence of harm must be shown by a
responding country to justify a trade restrictive measure under Article XX (b). In this case,
there was no actual justification to ban mangoes as there was no appropriate assessment of risks
associated. In fact, reports suggest that this decision was taken to strengthen EU’s bargaining
20
position of Free Trade Agreement and other bilateral issues with the Indian government.51Thus,
the first requirement of a measure under Article XX (b) as laid down in EC Asbestos has not
been met.
Now, we must examine whether there existed any alternative measures that EU could
have taken to tackle the issue of import of mangoes from India. In my opinion there were. To
understand this, let us see how the issue of the ban on mangoes was solved. In January 2014,
the EU removed the ban on the import of mangoes in India based on a series of negotiations
between the two players. Thus, it is evident that the EU could have solved the problem of the
quality of mangoes from India by means of negotiation, and yet it chose to impose the ban.
This clearly indicates that the EU chose to forego a less trade restrictive measure which is
against the principles of necessity as laid down in the case of US-Gambling, Korea-Beef and
Brazil Retreaded Tyres. In addition, the Government of India had notified on 1st April that only
certified food packing houses could export fruits and vegetables. This had not yet been
implemented when the ban was placed; however, following the same the EU had been notified
by the Indian government of this reform.52 Yet, it chose to place the ban on import of mangoes,
against all jurisprudence of the test of necessity. Furthermore, it is also pertinent to note that
the EU imposed a temporary ban on Indian Alphonso upto December, 2015. If the ban was that
necessary to protect the plant and human health in EU would they have imposed a measure
limited by time? Would they not have restricted such imports in perpetuity if the mangoes
posed such a danger to the environment in EU? Thus, it is based on these arguments that I argue
that the ban on Alphonso mangoes from India would not have fulfilled the test of necessity
under Article XX (b).
Another interesting aspect that one must consider of the issue concerning the ban on
Alphonso mangoes is whether India should be accorded a differential position in terms of the
standard of production and processing of mangoes because it is a developing country. The
Secretary General of the Federation of Indian Chambers of Commerce and Industry stated
following the ban on Alphonso Mangoes: ‘We're a developing country and cannot possibly
51
'Misguided mango import ban could hit India-EU FTA', The Economic Times, 29 April, 2014, accesible at
http://articles.economictimes.indiatimes.com/2014-04-29/news/49493563_1_india-eu-fta-eu-ambassador-
indian-alphonso.
52
Economy- WTO SPS Agreement EU Ban on Indian Mango, April 2014,accesible at
http://mrunal.org/2014/05/current-april-week4-p2-economy-wto-sps-agreement-eu-ban-indian-mango-hdfc-
bank-foreign-investment-fii-problem-sc-guideline-cheque-bouncing-rbis-public-key-infrastructure-pki.html.
21
match the standards that are expected for all produce.’53 Let us first examine the difference in
standards for the production and processing of mangoes in the EU and in India. The lack of
vapour heat treatment plants due to lack of access to technology and high cost is the first major
constraint in exporting fresh mangoes to the EU. Next, the cost of labelling the mango produce
is as high as 10 per cent of the total value, and the testing costs are as high as 10–15 per cent
of the total value. Moreover, there are also long processing formalities after the shipment
arrives at the ports, leading to demurrage and losses.54 Hence, it is evident that there does exist
an innate difference the standards of requirement between the EU, developed country and India,
a developing country. In my opinion the EU should have also weighed this in mind before
imposing the ban on mangoes. This is also something that has been voiced in the Sanitary and
Phytosanitary Measures Agreement of the WTO, through Article 9 and 10 which states that
developing countries must be provided additional time and consideration to improve and
upgrade their production and processing standards. Moreover, as was held in the case of US-
Shrimp Turtle case, the EU must not arbitrarily impose its own values and so called
environmental policies on other developing Members; in this case India.
Thus, as is evident from my analysis, the ban on the import of Alphonso mangoes from
India to the EU cannot be justified on grounds of environmental protection under Article XX
(b) of GATT. This was a measure that in my opinion was applied in an unjustified manner for
irrelevant considerations and protectionist purposes and therefore, unjustifiable under Article
XX (b) and grounds of environmental protection.
53
EU's Indian Mango Ban to Counter Pests, 6 April 2014, accesible at http://en.haberler.com/eu-s-indian-mango-
ban-to-counter-pests-461866/.
54
VEENA JHA, ENVIRONMENTAL REGULATION AND FOOD SAFETY: STUDIES OF PROTECTION AND FOOD SAFETY,
53, (2005).
22
IX: CONCLUSION
Through the course of this project, I have explored multiple aspects associated with
trade, environment policy and their inter-relationship. I first addressed the concept of necessity,
its importance and role in ensuring holistic world trade, especially in light of Article XX of
GATT. Following which I examined whether or not Article XX was conceptualised to protect
the environment, and whether this has even occurred through an in-depth analysis of two
‘environment friendly’ provisions of Article XX; sub-paragraphs (b) and (g). To understand
these provisions I have elaborated on their context of adoption and future interpretation by the
Panel and Appellate Body of the WTO. In doing so, I have addressed the impact and
implications of each dispute that arose and how it contributed to nurturing the relationship
between trade and the environment. Following this, I examined the position of developing
countries and how prior to the Brazil Retreaded Tyres case, the use of Article XX was restricted
to as a protectionist measure undertaken by developed countries as against developing
countries. And lastly, to gain a practical and conceptual understanding of the issues at hand I
had explored the ban imposed by EU on the import of Alphonso mangoes from India. This
example has helped me to gain an insight into the inter-play of Article XX, environmental
considerations and the interests of developing countries. Thus, as is evident, the project has
covered varied topics and resultantly, my conclusions with respect to the same are also multi-
faceted. Thus, to address this section I will be exploring three sets of conclusions; first, the
current status and certainty (or the lack of it), around the test of necessity, second, the future
prospects pertaining to the general exceptions under Article XX and their usage for
environmental protection objectives, and last, certain suggestions for developing countries.
55
Jurisprudence of Article XX, at 118.
23
As a result of this, the WTO adjudicating bodies face the difficult task of weighing and
balancing the policy objectives and public interests invoked by the responding Members. This
is a risky proposition as though this induces a form of flexibility in deciding disputes, it leaves
Members uncertain of the legality of their measures. Moreover, a too broad or narrow
interpretation of the necessity test can be an extremely dangerous situation. This was
adequately voiced by an author, where he stated that:
While a broad application of the general exceptions carries the risk of undermining the
fundamental principles of the WTO agreements, a very stringent approach may infringe
the legitimate interests and sovereign rights of a Member with regard to the protection
of important values of its society.56
Moreover, since the Appellate Body in the Korea-Beef dispute has also held that
necessary could refer to a rage of degrees of necessity, the term has further been open to several
interpretations. Thus, keeping in mind that the dispute settlement system of the WTO is a
central element in providing security and predictability to the multilateral trading system,57the
Panel and Appellate Body through future disputes must devise more uniform standards of
necessity and how Members can gauge the legality of their actions.
Moving on now, to the second aspect of the interaction between international trade, its
exceptions under Article XX and the environment. As the decisions involving Article XX (b)
and (g) have shown, the GATT was not conceived to protect the environment and human
health. The tests applied by the adjudicatory bodies have not been uniform and often resulted
in diverging opinions. Yet what is undeniable is that the rulings of the Panel and the Appellate
Body have definitely nudged GATT jurisprudence in the direction of accommodating for the
environment. It has opened the door for using Article XX (b) and (g) as a broad environmental
exception to GATT. This clearly indicates that the jurisprudence of the GATT has come a long
way in accommodating non-trade objectives as today environmental protection is no longer
treated a non-trade tariff barrier but a legitimate goal of the international trading community as
well. However, caution must be taken in this gradual process of greening of the GATT. Steve
56
Nicolas F. Diebold, The Morals and Order Exceptions in WTO Law: Balancing the Toothless Tiger and the
Undermining Mole, 11 J. Int’l Econ. L. 43 (2007).
57
WTO Agreement, Annex 2, “Understanding on Rules and Procedures Governing the Settlement of Disputes”
art. 3.2, Apr. 15, 1994, 1869 U.N.T.S. 402.
24
Charnovitz had cautioned this through an article in the Journal on World Trade, where he stated
that:
“If the "greening" of the GATT means that the Contracting Parties should respect
environmental objectives in administering Article XX, then greening is a good idea. But
if greening means that the Contracting Parties should subordinate economic goals to
ecological imperatives, then greening is a bad idea-for the environment and for the
GATT. It is a bad idea for the environment because the GATT does not have the
scientific expertise to judge what ecological measures are appropriate.’’58
Thus, a careful balance must be struck between balancing trade and environment.
Hopefully, the WTO through its adjudicatory bodies will present similar encouraging trends
and increasingly accept national health and environmental policy as legitimate general
exceptions in context of Article XX and sustainable development.
Sustainable development brings me to my last ground of submissions for this topic; that
of the interests of developing countries and the doctrine of necessity under Article XX. Over
the years, the domineering position of developed countries in WTO negotiations has translated
into an institutional bias in favour of developed countries. Developing countries on the other
hand, have weaker bargaining positions and often face the blunt of protectionist measures taken
by developed countries. These are the measures that developed countries attempt to justify as
necessary for their policies, in this case environmental protection, under Article XX of GATT.
However, in my opinion, trade, environment and sustainable development cannot be attained
without the integration of developing countries into the trading system. WTO members must
address environmental concerns with broader sustainable development framework that
includes structural components such as increased market access, access to better technology,
economic development, poverty alleviation and equity. Further, as was seen in the Alphonso
Mangoes case, developed countries must look to negotiate with developing countries rather
than unilaterally imposing trade restrictive measures. Thus, in this manner, the WTO can truly
attain its objective of expanding trade, optimally using the world’s resources, sustainable
development, preservation of the environment and economic development of developing
countries.59
58
Charnovitz, at 55.
59
Preamble, Marrakesh Agreement Establishing the World Trade Organisation.
25
26
BIBLIOGRAPHY
A. CASES
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27
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2014
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Toothless Tiger and the Undermining Mole, 11 J. Int’l Econ. L.
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1. BHAGWATI JAGDISH, 'ON THINKING CLEARLY ABOUT THE LINKAGE BETWEEN TRADE.
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AND INTERNATIONAL LAW 78-81 (2006).
E. REPORTS
28
2. Dispute Settlement Commentary for Appellate Body Report, U.S.-Standards for
Reformulated and Conventional Gasoline, at 22, WT/DS2/AB/R (2001).
3. WTO, Note by the Secretariat, Necessity Tests in the WTO, (2003).
29