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The recent 'shrimp' report of a GATT panel arose against a backdrop of
concerns in the United States about the incidental capture and drowning of sea
turtles by shrimp trawlers. [31] This forms a
significant source of mortality for sea turtles (as does tuna fishing for
dolphins), all species of which are listed as endangered or threatened pursuant
to the US Endangered Species Act. Such concerns led, in 1987, to the enacted in
the United States of regulations concerning, inter alia , the deployment
of Turtle Exclusion Devices (TEDs) by shrimp fishermen.
[32] In 1989 the United States enacted further
legislation. This so-called Section 609 provided that:
...shrimp harvested with technology that may adversely affect certain sea turtles protected under US law may not be imported into the United States, unless the President annually certifies to the Congress that the harvesting country concerned has a regulatory programme governing the incidental taking of such sea turtles that is comparable to that of the United States, that the average rate of that incidental taking by the vessels of the harvesting country is comparable to the average rate of incidental taking of sea turtles by United States vessels in the course of such harvesting, or that the fishing environment of the harvesting country does not pose a threat of incidental taking to sea turtles in the course of such harvesting. [33]
Whereas, initially, Section 609 was applied only to countries of the
Caribbean/Western Atlantic, its application was extended to all countries in
1996, pursuant to a ruling of the US Court of International Trade. At this time
also, the new guidelines established that all imports of shrimp or shrimp
products into the United States must be accompanied by a declaration providing
either that the shrimp originated in a certified country, or that they
had been harvested under conditions that did not adversely affect sea turtles.
Hence, at this time, the United states legislation permitted the importation of
specific batches of shrimp from non-approved countries so long as that batch
had been captured in a manner deemed appropriate by the United States. This
changed in 1996, again pursuant to a ruling of the US Court of International
Trade. Henceforth shrimp harvested with commercial fishing technology would be
permitted access to the US market only in the event that it originated in a
state certified by the President under Section 609.
[34] Thus, at this point, the United States
shifted to a state of origin based approach to market access, and it is with
the legality of this approach that the panel report is concerned.
As
a starting point it should be observed that the GATT panel found that the US
measures under consideration amounted to a 'prohibition or restriction' on the
importation of shrimp and hence constituted a violation of GATT 1994, Article
XI.1. [35] Before proceedings to examine the
panel's construction of the GATT's environmental exceptions it is important to
say a few words about this initial finding. The structure of the GATT is such
that measures which comply with Article III are 'saved' and will not fall for
consideration under the GATT Article XI prohibition on quantitative
restrictions. [36] Article III.4 lays down the
principle of national treatment, providing that:
The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favorable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use...
At first sight it might appear as though the US measures might be
justified on this basis, so long as they are genuinely even-handed, implying
neither direct nor indirect discrimination. [37] However, the question of whether a given measure is
discriminatory depends upon the construction of 'like' for the purposes of
comparing domestic and imported goods. The issue of when one product is 'like'
another is viewed by GATT panels as an issue of policy rather than as a
straightforward issue of fact. 'Likeness' is conceived as, in part, contingent
upon the aim and effect of the measure and whether it is such as to afford
protection to domestic product. Thus, the concept of 'like' is conceived
against a backdrop of consideration of the overall legitimacy of the measure in
terms of its regulatory purpose or protectionist aim or effect.
[38] Moreover, various GATT panels have
attached considerable significance to a Note to GATT, Article III.4 which
provides:
The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin. [39]
On this basis it has been consistently held that Article III requires a
comparison between products, and not a comparison between the policies or
practices of the importing state and the state of origin.
[40] Products which are intrinsically
comparable will (subject to the teleological reasoning noted above) be
considered as 'alike', regardless of differences in the manner in which they
have been produced or harvested. One batch of shrimp is like any other,
regardless of how many turtles died in the course of their capture.
Consequently, to treat one batch of shrimp (or tuna) differently from another
on the basis of differences in harvesting technique is, where this prejudices
the imported product, to offend the principle of national treatment. This is a
crucial point. The concept of national treatment has been construed in such a
way as to permit the application of domestic product standards to
imported goods. However, the application of domestic process standards
to imported goods will amount to less favourable treatment and hence derive no
protection under Article III. While de jure the principle of national
treatment is preserved, because of the manner in which 'like' is construed,
de facto it has been undermined in the case of process standards.
Though this issue of the definition of like products lay behind the
panel's report in the shrimp case, the report itself focuses principally upon
one legal question; namely the scope of the GATT, Article XX environmental
exceptions. The relevant paragraphs of this article provide:
Subject to the requirement that such measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement of measures:
...
(b) necessary to protect human, animal or plant life or health;
...
(g) relating to the conservation of natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption.
The scope of these exceptions is by no means free from doubt. Over the
years GATT panels have adopted a restrictive approach which has been much
criticized. [41] On the issue under
consideration here however, namely the application of domestic process
standards to imported goods, there is consistency in terms of result though not
in terms of reasoning. While the reports of GATT panels have become more
nuanced on this point over time, culminating in the decision in the shrimp
case, there nonetheless remains a high degree of skepticism regarding such
measures. [42]
In the shrimps case
the panel concludes that the US measures do not fall within the scope of
Article XX, and specifically that they are not compatible with the 'chapeau' to
that article, representing an example of 'unjustifiable discrimination between
countries where the same conditions prevail'. It did does on the basis of
reasoning which is contextual as well as teleological, placing particular
emphasis upon the object and purpose of the WTO Agreement as a whole, of which
GATT 1994 forms only one part. The panel insists, having regard to the preamble
to the WTO Agreement, that the 'central focus of that agreement remains the
promotion of economic development through trade', while acknowledging that
'environmental considerations are important for the interpretation of the WTO
Agreement'. [43] It stresses the multilateral
nature of the trading system which that Agreement seeks to construct and the
need to consider whether any measure restricting imports is capable of
undermining this multilateral approach. It addressing this issue it observes
the importance of assessing the effect not only of the measure under
consideration, but also the effect that would arise were other states to follow
this example and adopt similar restrictive measures. In this respect it
observes:
...if an interpretation of the chapeau of Article XX were to be followed which would allow a Member to adopt measures conditioning access to its market for a given product upon the adoption by the exporting Members of certain pollicies, including conservation policies, GATT 1994, and the WTO Agreement could no longer serve as a multilateral framework for trade among Members as security and predictability of trade relations under those agreements would be threatened...This follows because, if one WTO Member were allowed to adopt such measures, then other Members would also have the right to adopt similar measures on the same subject but with differing, or even conflicting, requirements. If that happened, it would be impossible for the exporting Members to comply at the same time with multiple conflicting policy requirements. Indeed, as each of these requirements would necessitate the adoption of a policy applicable not only to the export product (such as specific standards applicable only to goods exported to the country requiring them) but also to domestic production, it would be impossible for a country to adopt one of those policies without running the risk of breaching other Members' conflicting policy requirements for the same product and being refused access to those other markets...Market access for goods could become subject to an increasing number of conflicting policy requirements for the same product and this would rapidly lead tot he end of the WTO multilateral trading system. [44]
In the light of this, and in view of the fact that the US measures
render importation contingent upon the adoption of satisfactory conservation
policies on the part of the exporting state, the panel makes a provisional
finding that the measures constitute unjustifiable discrimination within the
meaning of the Article XX chapeau. Following consideration of additional
arguments submitted by the United States, the panel confirms this conclusion.
Its finding in this respect is not predicated upon the extra-territorial nature
of the measures at hand, but upon their unilateral nature. The panel expresses
a clear preference for multilateral (negotiated) solutions to transboundary or
global environmental problems, stressing the failure of the United States to
commence negotiations on an agreement on sea turtle conservation techniques
which would have included the complainants, before the imposition of the import
ban. In this regard it observes that 'the risk of a multiplicity of conflicting
requirements clearly is reduced when requirements are decided in multilateral
fora'. [45] Nonetheless, by way of
qualification the panel insists' that its findings regarding Article XX 'do not
imply that recourse to unilateral measures is always excluded, particularly
after serious attempts have been made to negotiate; nor do they imply that, in
any given situation, they would be permitted'. [46] The intention is clearly that the issue must fall for
determination on a case by case basis, having regard to the circumstances and
background of individual measures. Significantly, therefore, the panel does not
exclude in principle the possibility of such measures being exempted under
Article XX. Equally, the tone of the report is such to suggest that where such
measures are adopted pursuant to internationally agreed standards, a more
permissive attitude would be adopted.
This, of course, provides an
interesting contrast to experience in the EU, where the existence of
(exhaustive) international standards, far from serving to legitimate
restrictions on trade, operates to facilitate free movement and to preclude
recourse to the generally available environmental exceptions. This is
especially apparent (c.f. Aher-Waggon [47]) where the standards concerned are conceived, in terms of
legal basis, as facilitating realization of the internal market. It might be
supposed further to reflect the spirit of mutual trust or 'mutual confidence',
'which governs relations between Member States when they give effect to a
Community directive in their national law', [48] and the range and effectiveness of the enforcement
mechanisms which underpins the Community legal order.
It will be
readily apparent from the above that the shrimp panel report is far from
conclusive of the issue under discussion. As already noted its stance is less
deterministic than that of previous panels. Its findings will inevitably be
controversial, especially as regards the supposed failure of the United Sates
to engage in serious multilateral negotiations, but overall the brilliance of
the report from a public relations perspective lies in its capacity to
represent all things to all people. In particular the panel is scrupulous in
its endeavour to carefully delimit the scope of its findings. It is
particularly important to note in this respect that the panel's report is
concerned only with the situation in which one nation restricts imports on the
basis, not of the manner in which a particular batch of a given product has
been produced or harvested, but on the basis of a failure on the part of the
exporting state to comply generally with the policies of the importing state.
It observes in this respect:
...we are limiting our finding to measures -- taken independently of any such international obligation -- conditioning access to the US market for a given product on the adoption by the exporting Member of certain conservation policies. In this regard, we note that banning the importation of a particular product does not per se imply that a change in policy is required from the country whose exports are subject to the import prohibition. For instance, a Member may ban a product on the ground that it is dangerous, and accept a similar product that is safe. This is clearly different from adopting a policy pursuant to which only countries that adopt measures restricting all of their production to products considered safe by a particular Member may export to the market of that Member. [49]
It is important that here the panel brings to mind the issue of product
as opposed to process standards. The question of whether a given item is safe
or dangerous will depend upon intrinsic product quality and not upon production
process. That, of course, is not to deny that the two may be related, with
production process impinging upon product quality. Indeed this is the case in
the second of our case studies below. Nonetheless the panel, by virtue of its
choice of illustration, leaves open (perhaps deliberately) the question of the
legitimacy of applying domestic process standards in the case of imported
goods, but on a batch by batch basis, rather than a country wide basis,
having regard to the processes underpinning production of the particular
item(s) concerned. It is apparent that this kind of measure would not
definitively undermine the multilateral nature of the trading system as
different batches of goods could be produced according to different methods,
according to the process standards prevailing in the market for which they are
destined. Nonetheless, such measures would present practical difficulties both
for the state of production and, in terms of compliance, for the importing
state. Equally, such measures would tend to negate many of the economic
benefits associated with a multilateral approach to trade, premised as this is
upon considerations of comparative advantage and economies of scale. Then
again, the same might be said in the case of product standards which differ
widely from state to state but whose application to imported goods is
sanctioned, subject to the principle of national treatment. The extent to which
process, as opposed to product, standards ought to be susceptible to
application to imported goods depends ultimately upon a range of broad, and
intensely political, considerations, some of which will be highlighted in the
conclusions below. Before doing so, however, it is necessary to consider
briefly the recent findings of the WTO Appellate Body (AB) in the shrimp case.
The AB is strongly critical of the panel's approach, reversing its
findings in a number of important respects. That said, while it begins with an
analysis of the scope of Article XX(g), and accepts that the US measures
'relate to the conservation of exhaustible natural resources' and are made
effective in conjunctions with restrictions on domestic production or
consumption, ultimately like the panel it concludes that the measures fall foul
of the Article XX 'chapeau'. Hence, whereas the AB does not accept that it is
possible to exclude a priori a general category of measures from the
scope of measures permitted under the 'chapeau', such are the circumstances
surrounding the application of the measures in question that they are found to
constitute unjustifiable and arbitrary discrimination between countries where
the same conditions prevail. For the purposes of this paper it is necessary
merely to highlight those factors which, taken cumulatively, were conceived by
the AB as supporting this conclusion.
First, the AB emphasizes the
'rigid and unbending standard by which United States officials determine
whether or not countries will be certified'. In practice certification is
contingent upon the adoption of a regulatory programme which is not merely
comparable, but essentially the same, as that applied in the United States.
'Other specific policies and measures that an exporting country may have
adopted for the protection and conservation of sea turtles are not taken into
account, in practice, by the administrators making the comparability
determination'. [50] The result of this is
that not only are differences in the conditions prevailing in other states not
taken into account, resulting in discrimination on the basis that the same
treatment is accorded in different circumstances, but also that 'shrimp caught
using methods identical to those employed in the United States have been
excluded from the United States market solely because they have been caught in
waters of countries that have not been certified by the United States'.
[51] This leads the AB to the conclusion that
the measures in question are 'more concerned' with inducing a change of policy
on the part of the exporting state, than with their stated objective of
protecting and conserving sea turtles.
Second, like the panel, the AB
attaches considerable importance to the failure of the United States to conduct
'serious, across-the-board negotiations with the objective of concluding
bilateral or multilateral agreements...before enforcing the import
prohibition...'. [52] That the United States
negotiated seriously with some, but not all, Members is presented as further
evidence of unjustifiable discrimination. Likewise, the existence of
differential 'phase-in' periods for different states, in terms of the
application of the United States measures, offers further evidence of their
discriminatory nature and impact. It is important to observe that, for the AB,
this failure to negotiate, was not the only procedural type obligation which
the United States had failed to respect. In concluding that the measures gave
rise not merely to unjustifiable discrimination, but also to arbitrary
discrimination, the AB attaches considerable weight to the 'singularly informal
and casual' manner in which the certification process is conducted, resulting
in a denial of 'basic fairness and due process'. [53] This process is characterized by a lack of transparency
and predictability, offering no opportunity for the applicant to be heard, or
to respond to arguments, or to appeal against, or seek review of, the
certification decision adopted. Remarkably, applicants receive no formal,
written notice of the decision adopted, and no reasons are proffered in support
of that decision. The AB notes in this respect that:
The provisions of Article X:3 of the GATT 1994 bear upon this matter. In our view, Section 609 falls within the 'laws, regulations, judicial decisions and administrative rulings of general application' described in Article X.1. Inasmuch as there are due process requirements generally for measures that are otherwise imposed in compliance with WTO obligations, it is only reasonable that rigorous compliance with the fundamental requirements of due process should be required in the application and administration of a measure which purports to be an exception to the treaty obligations of the Member imposing the measure and which effectively results in a suspension pro hac vice of the treaty rights of other Members. It is also clear to us that Article X:3 of the GATT 1994 establishes certain minimum standards for transparency and procedural fairness in the administration of trade regulations which, in our view, are not met here. [54]
The decision of the AB in the shrimp case represents an important
watershed in the evolution of WTO law in the area of trade and environment.
This case represented the first opportunity for the AB to address the
contentious question of the status of measures adopted by one state with a view
to protecting environmental resources situated outside of its territory. The
decision of the AB is predicated upon a generous construction of Article XX(g),
particularly as regards its light touch approach to the application of the
concept of proportionality, [55] and upon
recourse to the Article XX 'chapeau' as a mechanism for preventing the abuse of
misuse of this exception, and as a means of maintaining a proper equilibrium
between the rights and duties of WTO Members. This approach is politically
expedient, offering succour both to the trade and to the environment lobbies.
Whereas in principle measures of the kind under consideration are legitimate
within the framework of the GATT, environmental protection representing a
significant objective, in this case, in view of specific circumstances
surrounding the application of the measures, the measures cannot be upheld. For
the future, the legitimacy of such measures will be adjudged not merely on the
basis of procedural considerations, including the obligation to negotiate
seriously, but in the light of their responsiveness to the particular
circumstances prevailing in a given state, and their flexibility in
acknowledging the equivalence or comparability of different conservation
policies adopted by their trading partners. It may be anticipated that measures
premised upon a batch-by-batch approach, as distinguished from an overall
national policy based approach, may have a higher chance of success in the
years to come.
[31] This currently forms the subject
of an appeal to the WTO Appellate Body.
[32] These are defined in the panel report as a grip trapdoor
installed inside a trawling net that is designed to allow shrimp to pass to the
back of the net while directing sea turtles and other unintentionally caught
large objects out of the net.
[33]
Supra n. 30, Section VII, Findings, para. 3
[34] A later judgment of this Court clarified
that its judgment did not apply to shrimp harvested by manual methods which do
not harm sea turtles, by aquaculture or in cold water.
[35] Supra n. 30, Section VII, Findings, para.
17
[36] See Schoenbaum, T.J.,
'International Trade and Protection of the Environment: The Continuing Search
for Reconciliation' (1997) 91 AJIL 268, p. 273. He notes that the 'mutual
exclusivity of Articles XI and III often presents difficulty, and can be
understood only in the context of the correct methodology for applying the
tests of the two articles. The measure in question should first be
analyzed as to whether it is protected by Article III. If it fails the tests of
Article III, Article XI is automatically applicable and, unless it falls under
one of the narrow exemptions...in that article, it will fail'.
[37] On the treatment of 'facially neutral
measures' (indirect discrimination) under the GATT, see Farber & Hudec,
'GATT Legal Restraints on Domestic Environmental Regulations' in Bhagwati &
Hudec, Fair Trade and Harmonization: Prerequisites for Free Trade?
(Volume 2, Legal Analysis) (The MIT Press, 1996), pp. 70-80.
[38] See ibid. and for a clear recent example
of this United States -- Taxes on Automobiles 33 ILM (1994) 1937. It
should be noted that the European Court has also on occasion manipulated the
concept of like in order to facilitate a given policy outcome. See, especially,
Case C-2/92 Commission v. Belgium [1992] ECR I-4431.
[39] Emphasis addded
[40] See, especially, Tuna/Dolphin II, supra
n. 29.
[41] For a forceful critique
see Schoenbaum, supra n. 36.
[42]
The second Tuna/Dolphin Report (by way of contrast to Tuna/Dolphin 1) did not
accept that there was any territorial limitation inherent in GATT, Article XX.
It found that parties are entitled to protect an environmental resource
situated beyond its territorial jurisdiction. Nonetheless it posited the need
for a direct causal connection between the measure and the environmental
objective pursued. Where a measure is capable of achieving its desired effect
only were it to be followed by changes in the policies of the exporting state,
it cannot fall within the parameters of the GATT environmental exceptions. See
supra n. 29, (Tuna/Dolphin II), esp. pp. 894 and 898. Although, ostensibly,
this represents a retreat from the first Tuna/Dolphin report, in practice it is
difficult to conceive of circumstances in which such a direct connection would
exist in the case of process standards, other than in the case of 'drifting
pollution' caused by production techniques deployed in one state spilling over
physically to the territory of the regulating state.
[43] Supra n. 30, Section VII, Findings, Para.
43.
[44] Supra n. 30, Section VII,
Findings, para. 45
[45] Ibid. para.
60
[46] Ibid. para. 61
[47] Supra n. 15.
[48] See Hedley Lomas , supra n. 24,
opinion of the Advocate General. This contrast rests upon the assumption that
the logic of Hedley Lomas would have applied even had the United
Kingdom adduced evidence of Spain's failure the comply with the
Community standards laid down by the directive. My reading of this case
suggests that this would be the case, though the issue is far from having been
conclusively settled.
[49] Supra n.
30, Section VII, Findings, para. 50
[50] Para. 21. United States -- Import Prohibition of
Certain Shrimp and Shrimp Products -- Report of the Appellate Body (Issues
Raised in this Appeal: Appraising Section 609 Under Article XX of the GATT
1994.) 12 October 1998. See http://www.wto.org
(The numbering of paragraphs in the AB report is confusing. Prior to the
findings and conclusions (two paragraphs) there is a section consisting of 44
numbered paragraphs, starting with the heading 'If such Measures are Made
Effective in conjunction with Restrictions on Domestic Production or
Consumption'. The citations which follow are found within these pages at the
paragraph indicated.)
[51] Ibid,
para. 23 (emphasis removed)
[52]
Ibid, para. 24
[53] Ibid, para. 39
[54] Ibid, para. 40
[55] It is important to note in this respect
that the AB, in construing paragraph g, finds that the measures in question are
not disproportionately wide in scope, and that the means deployed are
reasonably related to the ends pursued. The relationship is observably a close
and real one. In this it seeks support from its earlier decision in the
United States -- Gasoline case (supra n.) where it promulgated the test
of whether the measures may be regarded as merely incidentally or inadvertently
aimed at the conservation of the resource in question. Later on, as noted
above, in its construction of the 'chapeau', the AB goes on to observe that the
measures are 'more concerned' with influencing the policies of its trading
partners than with conservation.
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