1 ASSESSMENT TASK 3

1 ASSESSMENT TASK 3

A. ISSUE 1: Whether it constitutes a violation of the TBT Agreement if Averna

incorporates labeling regulations for automobiles into their implementation of the
Sustainability Promotion Act?
1. Whether the measure at issue qualifies as a technical regulation?
Averna implemented the Development Promotion Act. Sustainable development in
relation to carbon emissions labeling
Based on the technical regulations of Annex 1.1 of the TBT Agreement, pertain to some
matters such as terminology, symbols,...1. In this specific situation, Averna introduced the
Sustainability Promotion Act to oversee the labeling of carbon emissions. This act entails the
application of a green label, referred to as 'Low Carbon Emissions,' for vehicles that fall
below a predetermined maximum carbon emissions limit. On the other hand, vehicles
surpassing this limit (specifically petrol and diesel cars) are assigned a red label denoting
'High Carbon Emissions. As a result, this action can be classified as belonging to the domain
of technical regulations.
2. Does this measure violate the stipulations outlined in Article 2.1 of the TBT Agreement?
(1) The question arises as to whether the products under scrutiny, both imported and
domestic, can be regarded as "like products.
An assessment of the criteria of "likeness" outlined in Article 2.1 of the TBT Agreement and
Article III:4 of the GATT 1994 was conducted to evaluate their influence on the competitive
relationship among the relevant products2.
Need to examine the concept of "competition/substitutability" to ascertain whether two
products can be deemed as "like products"3.
(i) The products’ characteristics:
An automobile is a type of vehicle designed for road transportation, categorized according to
the type of fuel utilized. Cars can be classified into various types, including petrol cars, diesel
vehicles, electric cars, and hybrid vehicles (which combine the use of both electricity and
gasoline/oil).
(ii) End-uses: predominantly for transporting individuals.
(iii) Consumers’ tastes and habits:
Consumers frequently make car purchases based on their budget and specific requirements,
including considerations related to environmental concerns, all with the objective of fulfilling
the same end-use: transportation. These choices encompass a range of options, such as
imported vehicles, gasoline and diesel cars that are affordable but possess lower quality and
red carbon emission labels. On the other hand, hybrid and electric cars, which are

1
Technical regulation:“... It may also include or deal exclusively with terminology, symbols, packaging,
marking or labeling requirements as they apply to a product, process or production method.” , Annex 1.1, TBT
Agreement.
2
Appellate Body Report, US – Clove Cigarettes, para. 13
3
Appellate Body Report, EC – Asbestos, para. 99
2 ASSESSMENT TASK 3

domestically produced, tend to be more expensive but are designated with green labels.
(iv) Tariff classification:
Despite this factor, it remains evident that under specific circumstances, their characteristics
and intended purpose are identical. Based on established criteria, imported and domestic cars
can be interchanged and deemed as 'like products'.
(2) Whether there was less favorable treatment accorded to the imported products?
When assessing the presence of less favorable treatment towards imported products, certain
factors come into consideration, namely competitive conditions and the requirement of
effective equal opportunities for imported goods 4. In the context of carbon labeling
regulations for new cars, which indicate their carbon emissions levels, it can be regarded as a
competitive condition applicable to both imported and domestic vehicles. Nevertheless, a
significant discrepancy is evident: whereas the majority of domestic vehicles adhere to their
respective country's regulations and bear green labels, Fastcar's vehicles do not meet Averna's
standards and are marked with red labels. As a result, this creates a perception among
consumers that green-labeled cars have a comparatively lower environmental impact, while
red-labeled cars are seen as contributors to climate change and the greenhouse effect.This
labeling system appears to be based on the car's origin rather than the actual standard, as the
standards primarily cater to domestic vehicles. Consequently, Averna's measure results in less
favorable treatment for imported cars by favoring and safeguarding domestic vehicles,
thereby impeding competition faced by imported cars from Qumar. As environmental
consciousness increases among Avernan citizens, it is expected to further diminish the use of
vehicles fueled by petrol and diesel in favor of vehicles that combine electric and
conventional power sources5.
In summary, the Sustainability Promotion Act implemented by Averna is in breach of Article
2.1 of the TBT Agreement.
3. The question arises as to whether the measure violates the provisions outlined in Article
2.2 of the TBT Agreement.
(1) Whether the measure under consideration imposes restrictions on trade?
A measure is deemed “trade restrictive” when it imposes limitations on trade 6. Measures that
do not impose trade barriers cannot be deemed incompatible with the provisions of Article
2.2. In this particular scenario, the implementation of this Act results in the vehicles
manufactured by Fastcar being confined to the domestic market of Averna, thus indicating
that the measure measures that impede trade.
(2) Is the measure being evaluated aligned with a legitimate goal?
The objective is to impart information to users, creating awareness that their choice of
vehicles has an environmental impact, with the ultimate goal of environmental protection.

4
As exemplified in cases like US – Section 337 (2001) and Korea – Various Measures on Beef (2001) -
Appellate Body Report, Korea – Various Measures on Beef (2001), para. 139
5
Hybrid and electric vehicles.
6
Appellate Body Report, US - Tuna II, para. 407
3 ASSESSMENT TASK 3

(3) Whether the measure under consideration is not excessively trade-restrictive while still
achieving a valid objective?
The implementation of carbon emission labels for Fastcar cars in Averna appears to create
commercial obstacles, discouraging consumers from purchasing cars labeled as 'red' and
favoring those labeled as 'green'. This measure seemingly aims to safeguard the car industry
in Averna facing challenges or encountering difficulties, which produces costly hybrid and
electric vehicles, from the competition. Consequently, the measure has a greater impact on
trade barriers rather than genuinely serving its intended purpose.
In summary, the implementation of this measure contravenes the provisions stated in Article
2.2 of the TBT Agreement..
4. The question arises as to whether the measure violates the stipulations outlined in
Article 2.4 of the TBT Agreement.
(1) Whether a pertinent international standard exists.
An international standard refers to a "Standard" that has been endorsed by an ISO7 and is
made publicly accessible. ISO-14020, which outlines broad principles governing
environmental labeling, serves as the recognized globally recognized standard in this
context8.
(2) Is ISO-14020 employed as the basis for the pertinent technical regulation?
Averna does not employ standards at the international level, such as ISO-14020, as the
underlying framework for the technical regulations concerning labels related to carbon
emissions as stipulated by the Act. FastCar contends that Averna should have adhered to this
standard when establishing its carbon emissions labeling system.
(3) Whether ISO-14020 is a suitable and effective method for achieving the pursued
legitimate objectives.
As per the ISO guidelines, which were adopted through a vote with a majority of 2/3, the
classification or grouping of products into three label types (1, 2, 3) should rely on a
comprehensive assessment of their environmental impact throughout their lifecycle, from
production to disposal. Considering this, ISO-14020 is regarded as an efficient and suitable
approach for accomplishing the legitimate objectives at hand.
In summary, the Act implemented by Averna is in breach of Article 2.4 of the TBT
Agreement.
B. ISSUE 2: Whether Averna permits the use of the green 'Low Carbon Emissions'
label for vehicles originating from Latebia in their marketing is contingent upon
whether the manufacturer's self-certification of compliance with the specified
requirements is relied upon and whether the upper limit of carbon emissions set by
Averna is in alignment with the provisions of the TBT Agreement?
Annex 1.3 of the TBT Agreement encompasses any method, whether direct or engineering,

7
International standardization organization
8
Appellate Body Report, US - Tuna II, para. 401
4 ASSESSMENT TASK 3

utilized to verify adherence to the specified regulations or standards, thus falling within its
scope. In this particular case, the manufacturer's report is pivotal in the application process
for the technical standard, as Averna relies on it. The report is based on Averna's upper limit
of carbon emissions standard, emphasizing its significance..
C. ISSUE 3: Whether the regulation pertaining to carbon labeling implemented by the
Promotion of Sustainability Act breache the national treatment principle outlined in
Article III:4 of the GATT 1994?
1. Does the measure fall under the category of a law, regulation, or covered requirement
by Article III:4?
Article III:4 pertains to laws, regulations, or requirements that impact marketing and product
utilization. In this scenario, Averna implemented a regulation for labeling carbon emissions
which had an influence on the competitive landscape of foreign cars in the local market.
Hence, this measure can be categorized as a regulation that falls within the purview of Article
III:4.
2. Do Averna's automobiles and cars from Quamar qualify as 'like products'?
As demonstrated previously.
3. Is there less favorable treatment imposed on imported products?
Averna has established criteria that prohibit the labeling of any Qumar Car as 'Low Carbon
Emissions' within Averna except if they meet the upper limit of carbon emissions
requirement specified in the Promotion of Sustainability Act. Consequently, imported cars
are subject to discriminatory treatment, which serves to protect domestic vehicles and affects
the competition faced by imported cars from other countries.
In summary, the implementation of this regulation contradicts the national treatment principle
outlined in Article III:4 of the GATT 1994.
D. ISSUE 4: Whether the measure implemented by Averna qualify as a particular
exemption specified in Article XX of the GATT 1994?
To ascertain whether the measure in question can be proven to violate Article XX or not,
three factors need to be evaluated9.
1. Does the measure fall within the scope of a particular exemption that is explicitly stated
in accordance with the stipulations outlined in Article XX(b) of the GATT 1994?
(i) The policy objective
The Carbon Emissions Labeling Scheme implemented by Averna, established under the
Sustainability Promotion Act, has a primary objective of providing consumers with accurate
information about the carbon footprint associated with their vehicle choices. The aim is to
increase consumer awareness regarding the climate impact of different cars and mitigate non-
sustainable production and consumption practices contributing to the phenomenon of rising

9
Three factors include: (1) whether the measure falls within the purview of paragraph (b); (2) whether the
measure falls within the purview of paragraph (g); and (3) whether the measure at hand fulfills the requirements
stipulated in the Chapeau of Article XX.
5 ASSESSMENT TASK 3

global temperatures.
Furthermore, the measure seeks to safeguard the welfare and vitality of humans, animals, and
plants. Similar to the case of Brazil – Retreaded Tires (2007), which addresses specific risks
related to health and environmental protection policies, the measure intends to limit risks to
these entities. Averna's goal is to reduce carbon emissions responsible for the greenhouse
effect and protect the environment. Thus, efforts have been made to minimize risks to
individuals, demonstrating that this regulation aligns with the health and environmental
protection policy referenced in Article XX(b) of the GATT 1994.
(ii) Necessity
The degree of contribution towards achieving the objective of the measure and its the level of
trade limitations or barriers:
The measure's effectiveness in achieving environmental goals is questionable and lacks
clarity. Averna has implemented the regulations regarding carbon labeling outlined in the
Promotion of Sustainability Act, but they have not provided sufficient evidence to evaluate
the specific maximum level set10.
Comparison with potential alternatives:
While Averna does not authorize alternative carbon emissions labeling schemes for cars
under its jurisdiction, there are feasible alternatives proposed by Fastcar, such as the ISO-
14020 standard on general principles for environmental labels. This indicates that fulfilling
the objective of the measure11.
As a result, the labeling requirement enforced by the Sustainable Development Promotion
Act contravenes the principles of the GATT 1994, and the utilization of Article XX(b) to
justify the measure as an environmental protection measure is untenable.
In summary, the measure implemented by Averna does not fall within the category of specific
exceptions specified under Article XX(b) of GATT 1994.
2. Does the measure fall under a specific exception mentioned in Article XX(g) of GATT
1994?
Examine the conditions: (i) conservation of exhaustible natural resources, (ii) a close and
genuine "relation to" requirement between the policy measure and its objective, and (iii) the
measure's efficacy when integrated with limitations on domestic production or consumption.
(i) Depletable natural resources refer to resources in nature that are at risk of depletion,
10
Because Averna conclude that when applying the Act, Fastcar's emissions surpass the designated maximum
threshold, while the Verus Carbon Neutral Seal indicates that Fastcar vehicles are achieving carbon neutrality
throughout their entire product life cycle. This discrepancy undermines the measure's contribution to carbon
emission reduction. Furthermore, the lack of uniform standards and Averna's reluctance to explore alternative
labeling methods limit the measure's effectiveness. These factors not only lead to trade restrictions but also pose
challenges in competing with imported cars, especially given the growing environmental consciousness among
consumers favoring green-labeled vehicles despite their higher cost.
11
The measure such as classifying products constructed using a life cycle perspective to evaluate the
environmental impact throughout the entire product life cycle, from its creation to its end-of-life stage, can be
achieved even in the absence of the existing labeling requirement mandated by the Sustainable Development
Promotion Act.
6 ASSESSMENT TASK 3

whether or not they have life. Carbon emissions contribute to the greenhouse effect and
climate change, which directly impacts people.
(ii) The implementation of carbon emission labeling aims to address unsustainable production
and consumption practices, thereby contributing to the mitigation of environmental warming
and its associated impacts. Nevertheless, in reality, this measure creates trade barriers and
restricts competition for imported cars, serving the purpose of protecting Averna's struggling
domestic auto industry, which produces higher-priced cars compared to imports.
(iii) When restrictions on consumption or local production are combined with this labeling
regulation, it appears that there are limited cars available for sale within Averna's territory.
This is because most domestic car manufacturers in Averna meet the upper limit set by the
Sustainable Development Promotion Act for carbon emissions and are designated as 'Low
Carbon Emissions' with the use of a green label.
3. As this measure does not fall under the exemptions of Article XX(b) and Article XX(g),
the requirements of the Chapeau of Article XX are not applicable.
GENERAL CONCLUSION: The Averna government should reconsider the measure
concerning automobiles imported from Qumar to prevent any restrictions or discriminatory
treatment that violates the non-discrimination principle under Article III:4. Moreover, this
measure does not fall under the exceptions mentioned in Article XX.