Exceptions to the GATT cornerstones

The GATT creates an extremely strict set of rule, which, without exceptions, could infringe dramatically on a nation’s sovereignty.

  • Without exceptions, a muslim country couldn’t prohibit the importation of pig-products
  • 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

Note: although the complainant usually has the burden of proof in a WTO case, once a defence is invoked, the burden of proof shifts to the defendant

Note: GATT Art. 20 is a strict test!

  • Structure of Art. 20
    • Chapeaux
      • (a) – public morals
      • (b) – protect human, animal, or plant life
      • (g) – conservation of exhaustible natural resources

Structure of an Article 20 argument

  • The structure comes from the US – Gasolinecase.
    • In US – Shrimp, the panel tried a different order, but the appellate body said that the only acceptable structure was the one proposed in US – Gasoline, which is as follows:
  1. Policy test – is the measure within the scope of one of the subsections to article 20?
  2. Subsequent trade tests– does the measure pass the subsequent trade tests specific to the subsection?
  3. Chapeaux test – does the measure pass the chapeaux requirement, applicable to all article 20 disputes?

Step 1: Policy test

  • The WTO does not judge, strictly, a nation’s policy, but, rather, the implementation of that policy.
    • The policy test is extremely broad, and there has only ever been one case which has failed on this ground: EC – GSP.
  • Policy test for subsection (a) – public morals
    • This has not yet been tested in GATT, although the GATS equivalent has been explored in US – Gambling
    • Standards of right and wrong maintained by or on behalf of a community/nation

  • Policy test for subsection (b) – human, animal or plant life
    • In Thailand – cigarrettes
      • Agreement that the measure was within the scope of the subsection
      • But also, the risk was held to be scientifically verifiably by experts
    • In US – Tuna
      • There was no agreement that the measure was within the scope
      • But the Panel concluded that the measure was within the scope
      • Thus, agreement is not necessary
  • Policy test for subsection (g) – exhaustible natural resources
    • A very broad test: in US – Gasoline, clean air was found to be an exhaustible resources

Step 2 – Subsequent trade tests

  • Subsections (a) and (b) have a “necessity” requirement
    • The question here is: “is the measure necessary to achieve the policy goal”? EC – Asbestos: dicta
    • The old test comes from Thailand – cigarettes– “least trade restrictive”
      • No other measure less inconsistent with the GATT

    • In Korea – Beefit was clarified
      • The measure does not need to be indispensable, but close

    • The new test is loosened: “less trade restrictive
      • A kind of proportionality test where the trade damage is proportionate to the protection offered by the measure
    • The burden of proof falls on the party accusing that there is a less trade restrictive measure: US – Gambling
  • Subsection (g) has a related to and an in conjunction withtest, which are considered a lighter burden than the “necessity” test discussed above
    • Related to
      • Defined as: is the measure “primarily aimed at” the policy goal? Canada – Herring – Salmon
      • Approved in US – Gasoline and US – Shrimp
        • are the means reasonably related to the ends?

        • Is there an observably close and real relationship between the measure and the ends?

    • In conjunction with
      • There must be a comparison between the trade measures and domestic measures: US – Canada – Tuna
      • Though the domestic and external measures need not be identical: US – Gasoline

Step 3 – Chapeaux Analysis

The purpose of the Chapeaux is to prevent the abuse of the exceptions.

  • Is the discrimination justifiable?
    • In US – Shrimp, regarding the requirement for TEDs, it was found that the measure was too rigid, lacked good faith negotiations and failed due process criteria therefore, it was arbitrary
  • Is the discrimination arbitrary?
    • Rigidity and inflexibility: US – Shrimp
  • Is the measure a disguised restriction on trade?
    • “Disguised” was defined in US – Canada – Tuna: “concealed beneath deceptive appearances”
      • In EC – Asbestos, this required the measure to be published

Article 21: Security exception

  • Allows breaches to:
    • protect sensitive information (Art. 21:a)
    • protect security interests in:
      • Fissionable material (21:a:i)
      • Arms and implements of war (21:a:ii)
      • Any trade in times of war or emergency (21:a:iii)


  • US – Tuna (Mexico) (Dolphin)
    • Facts:
      • Purse Sien nets kill dolphins
      • US put an embargo on Mexican imports of tuna
      • Breach of Article 3 (national treatment) or 11:1(quantitative restrictions) alleged
      • US said no breach, or, if there were a breach, that it was excepted by Art. XX:b/XX:g
    • Held:
      • No breach of Art. 3
      • Breach of Art. 11:1
      • XX:b/XX:gdid not extend to protecting plant/animal/human life outside of your territory (extra-jurisdictional)
      • XX:b Further, was not necessary, because options to protect dolphins within the bounds of GATT were not explored
      • XX:g based on US incidental rates: too fluid and unpredictable to be justifiable
  • US – Shrimp (Turtle extraction) (brought by Malaysia)
    • Facts:
      • US required a Turtle Extraction Device for Shrimp to be imported
      • This was a breach of Article 11:1(export bans)
      • Malaysia claimed it was not excepted by the Article 20:g
    • Held:
      • Failed under the Chapeaux, because it was arbitrary and unjustifiablydiscriminant between countries it applied to
        • Countries had different implementation windows, negotiations, etc.
        • Lack of good faith negotiations and the rigidity of the methods
  • US – Gasoline (brought by Brazil and Venezuela)
    • Facts:
      • Gasoline Rule only allowed gasoline that was of a minimum cleanliness, as compared to a baseline
      • the statutory baseline placed a higher burden on foreign producers
    • Held:
      • There was a breach
      • Failed exception under Art. 20:bbecause of “necessity”
        • since there were other consistent or less inconsistent measures reasonably available to the US for the same policy objective.

      • Re: Art. 20:g– clean air was held to be a deplete-able resource
        • But failed, since the measure was for the protection of clean air, but the discriminatory baseline measures were not
        • Failed the Chapeaux, because of the means it was applied – “so as to lead to an abuse”
  • Thailand – Cigarettes (Brought by US)
    • Facts:
      • Thailand banned imports of cigarettes, stating that the breach to Art. 11:1 was justified by Art. 20:b
    • Held:
      • Internal tax was OK, but the import restriction was not excepted by Art 20:b because it was not a “necessary” measure

No Comments

Be the first to start the conversation!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s