Jean Monnet Center at NYU School of Law


Part One

The EU and the WTO share a number of obvious features: both are organisations established primarily to promote trade between states. They are also distinctively different in many respects: the WTO is a very broad multilateral organisation while the EU is a geographically limited regional entity. Further, even in the early stages when it was primarily a common market, the EEC has always been a more closely integrated collection of states than the GATT or the WTO. Nonetheless, the EEC's common market was modelled partly on the GATT, and many of the EC Treaty provisions clearly reflect this. Interesting comparisons can be drawn between the similar EC and GATT rules on matters such as internal taxation, discriminatory and non-discriminatory trade restrictions.2 It might be expected that given the EC's experience in dealing internally with many of these same issues, such as the removal of discriminatory barriers to trade, and of disproportionate regulatory restrictions between states, it would be well equipped to respond to such issues arising in the context of a multilateral trade organisation of which it is a member.

However, the situation is rather different where it is not a case of the EC enforcing the rules of the internal market against one of its own member states, but instead the EC confronting a WTO-based challenge to one of its own regulatory measures. This is not only because of the tighter supranational legal and constitutional framework of the EC as compared with the looser international legal nature of the WTO and its agreements, but also because of the development of the EU into an entity which, in the scope of its aims and its policies, is much more than a trade organisation. Whatever the significance of the developments which emerged from the Uruguay round, with the move from GATT 1947 to GATT 1994 and the establishment of the WTO, it remains a fundamentally different entity from the European Union. Its aims and objectives, its political institutions, its dispute resolution bodies, its instruments, although sharing common features, are profoundly different in key respects from those of the EU. Two fundamental differences between the EC/EU and the WTO - in the legal-institutional dimension and the policy-substantive dimension - lie at the heart of many of the tensions created by the application of the rules and norms of the latter to the former. These are the dimensions which need to be borne in mind when examining the impact of the WTO on EC decision-making. Yet at the same time, a degree of convergence can be seen, and at the very least some degree of mutual influence between the two systems, in particular as the WTO Appellate Body, with its rather more juridical nature than the previous GATT panels, begins to develop its jurisprudence through the disputes coming before it.

The EEC began life, along with the other two Communities, primarily as a common market; an area which, although going beyond a free trade zone having established fairly strong legal and political institutions to achieve its goals, was not at the time the kind of ambitious political and constitutional entity which it undoubtedly is today. It has since that time expanded not the scope of its policies from those such as trade, agriculture and competition to a whole range of others including environmental, consumer and social policy. Secondly, its institutions have also evolved, with an increasingly evident desire for greater constitutional legitimacy to underpin the extent and nature of its powers and functions. Despite the argument that its key or core priorities remain those of the promotion of trade, the multiple aspirations and tasks of the EU as a closely integrated regional organisation are unquestionable. Its role and functions are wide and general and the balance sought between the imperative of free trade and its many other policy goals is complex. Even if the EU's identity as a "polity" continues to be contested, the WTO, despite the institutional and substantive changes brought about by the Marrakesh agreements, falls well short of being described as such. It is an international organization which shares many of the core aims and tasks set for itself by the EEC - primarily those of promoting trade and raising the standard of living - albeit not a regional but on a worldwide basis, and it currently lacks both the aims and the instruments to become a more general organ of world governance. To use the terminology familiar in the EC context, its methods and instruments are those of negative rather than positive economic integration (if integration is not too loaded or too strong a word for the establishment between states of a high level of open trade and market access).

At the same time, it is true to say that the very success of the WTO in establishing a rule-of-law-based system for promoting multilateral trade/commerce has led to arguments for its development of more democratic institutions and more positive instruments, partly to build on the success of a cooperative international organisation which has allowed for the peaceful resolution of disputes between states, but more particularly in order to build respect for other values and policies more strongly into its framework. The centrality and strength of the MFN, non-discrimination and other rules on trade effectively consign all other important policies - not only those such as environmental, health, social and cultural policies, but even the position of developing countries - to the status of exceptions which must be argued for within relatively strict constraints, rather than important competing or even co-equal policies in their own right.3

Nevertheless, while there may be no parallel at WTO level to the mixture of negative rules and positive policies seen in the EC's combination of Treaty-based trade-restriction prohibitions on the one hand and legislative harmonisation/co-ordination measures on the other, there is nonetheless a strong emphasis on the need to agree and to develop positive international standards through acceptable and legitimate processes as one crucial way of addressing the tension between the goals of trade liberalisation and legitimate regulation. The WTO does not have its own standard-setting processes and its own political institutions for developing such norms, but other international bodies such as the WHO, ISO, the Codex Alimentarius and the OECD are indicated as a source of guidelines and norms for Member States.4

It is interesting to observe how the EC, long used to grappling within its own borders with the problem of how to reconcile free trade provisions with national regulatory interests,5 has responded when it has found itself in the position of the member whose regulatory policies - such as those on beef hormones, eco-labelling or aircraft noise - are open to challenge for compatibility with the rules of the trade organisation. This may be an analogy which has its limits, but it is not inapt to compare the response of the ECJ, in confronting the rules of this international organisation which are potentially in conflict with the rules and policies of the EC, with that of various national constitutional courts to the conflicts which have arisen between fundamental national norms and EC law. In denying the direct effect of the GATT and insisting on the effectiveness of its provisions within the EC legal order only insofar as the institutions of that order have expressed or implied that it should have such effect, the ECJ's response is not dissimilar in certain ways from the assertion of various national courts that EC law does not take effect unconditionally and supremely within the national legal order, but must always be channeled through national constitutional provisions, which will themselves limit its applicability where it comes into potential conflict with basic norms of the national order. In each case there is an apparent desire on the part of the judicial authority on the one hand to respect the legal obligations of membership of the organisation - in the case of national courts by acknowledging the prima facie requirement to give primacy to EC law, albeit in their own way, and in the case of the ECJ by acknowledging the binding nature of WTO law - but equally an intention to impose limits on the way in which those obligations take effect, so as to protect the integrity of aspects of their own legal order and the perceived distinctiveness of the values and norms constituting their political order.

This judicial response is not of course open to the political institutions, to whom the direct effectiveness or otherwise of the WTO agreements has less immediate relevance. 6 A fundamental, if rather obvious point to emphasise is that whatever controversy there may be over the exact legal status of WTO law within the EC legal order, there is no question about the binding nature of the former. The EC, as a signatory and party along with its Member States, to the WTO, clearly accepts that the obligations contained in the WTO agreements are legally binding upon it. How those obligations are to be given effect may be a matter of dispute, but their binding nature is not, and it is primarily the political institutions which must give effect to WTO law. If an EC action or measure is found to conflict with the provisions of the GATT, for example, it is up to the Commission and the other institutions to find a solution which is compliant.

The European Commission found itself in relation to the beef hormones dispute, for example, in the position vis-à-vis the WTO bodies which various EC Member States have found themselves vis-à-vis the EC, being sanctioned for introducing a public health and consumer protection policy which was apparently not sufficiently supported by scientific evidence. Whereas the ECJ had rejected a challenge to the ban on hormones in beef in the earlier FEDESA case,7 the Appellate Body of the WTO reached a different conclusion in response to the complaints brought by Canada and the US in finding that the measure was not based upon an assessment of risk.8 This dispute, and the difference between the balance struck, the method for striking the balance, and indeed the result reached in the respective adjudicative tribunals of the EU and the WTO, raises obvious questions about the likelihood of the Appellate Body's approach influencing the ECJ's methods of interpretation and approach to judicial review. It does not necessarily raise the question whether the ECJ would or should treat WTO provisions as being directly or indirectly effective within the EC legal order. Rather the question is whether, when confronting a similar set of questions about the justifiability of a ban on hormone-treated beef in the context of the EC Treaty's prohibition on trade restrictions with its exception for legitimate public health measures, the ECJ might adapt its approach so as to make more likely a congruence between the two. However, as suggested above, this is not a one-dimensional legal question of whether the ECJ as an adjudicative body should be influenced by or should adopt the reasoning of the Appellate Body in relation to a similarly structured set of legal provisions governing trade. It is a more complex question precisely because the values which underpin the assessment made by the Appellate Body and the ECJ respectively are likely to reflect both the institutional differences (for example in terms of the possible reasons for judicial deference to the lawmaking bodies) and the substantive normative differences (e.g. in terms of the particular balance struck at EU level between trade liberalisation and public health/consumer concerns) between those two organisations.

2 See J.H.H., Weiler, "The Constitution of the Common Market", in P. Craig & G. de Burca, The Evolution of EU Law (Oxford: OUP, 1999).

3 Even the new commitment to sustainable development in the preamble to the WTO agreement does not amount to any kind environmental integration clause like that inserted into the EC Treaty, and the status of environmental issues continues to be that of an exception which must be positively argued for under the GATT, SPS and TBT agreements.

4 Quite apart from the many legitimacy concerns and other objections to the way in which international standardisation comes about, the various difficulties encountered in trying to reach agreement on international standards frequently results in the postponement of and hindrance to the attempts by individual members in the meantime to adopt legitimate non-trade policies, such as, for example the EC leg-hold trap regulation 3254/91 OJ 1991 L308/1, and the long saga of its bringing into force and application.

5 These are exemplified particularly clearly in disputes arising before the ECJ under provisions such as Articles 28 and 30 of the EC Treaty.

6 See e.g. the integration of WTO considerations into the preparatory stages on the decision-making process in the Commission's proposed amendment to Council Directive 76/769/EEC relating to restrictions on the marketing and use of dangerous substances, COM(99)620: "In order to be WTO consistent, restrictions on some azo dyes need to be well justified by health risk to the consumers". See more generally the WTO consciousness which infuses the Commission's recent Communication on the Precautionary Principle:
COM(2000)1 final, and also its 18th Annual Report to the Parliament on the EC's anti-dumping and anti-subsidy activities COM(2000)440. For other examples, see the proposal for a regulation on foodstuffs hygiene COM(2000)438, OJ 2000 C365/43, and in particular point 28 of the recitals concerning compliance with obligations in the WTO SPS Agreement.; also the proposed amendment to Article 19 of Directive 85/611 on collective investment in transferable securities (including non-European funds), COM(2000)329, OJ C 311/302 which the explanatory memorandum deems necessary in order not to `run counter to WTO commitments".

7 Case 160/88 FEDESA v. Council[1988] ECR 6399.

8 See J. Scott, "Of Kith and Kine (and Crustaceans): Trade and Environment in the EU and WTO" in Weiler, ed., The EU, NAFTA and the WTO: Towards a Common Law of International Trade (Oxford: OUP, 2000) , S. Pardo Quintillán "Free Trade, Public Health Protection and Consumer Information in the European and WTO Context" (1999) 33 Journal of World Trade 147 and R. Howse "Democracy, science and Free Trade: Risk Regulation on Trial at the WTO" (2000) 98 Mich.L.R. 2329.



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