Yeji Han Public International Law Supervisor: James Mathis Date of Submission: 26th July 2019
Sustainable Development and the WTO in Three Dimensions:
Economic, Social and Environmental
*Abstract
Trade is a vital tool to achieve sustainable development, so this article discusses sustainable development in the WTO rule in three dimensions: economic and social development and environmental protection. This article focuses on what kind of rules in the WTO for sustainable development and whether they are effective. There are mainly three parts
discussed in this article: special and differential treatment, labor rights and fisheries subsidies. Each part deals with a short history of the concept and how it works in the WTO. Regarding preferential treatment and fisheries subsidies, there have been conflicts of opinions between developed countries and developing countries. The conflicts are also discussed in this article. In the case of labor rights, the applicability of the labor standard to Article XX of the GATT is discussed.
Contents
I. Introduction
II. Sustainable Development in International Law A. A Brief History of Sustainable Development
B. The Evolution of the Concept of Sustainable Development in the WTO C. Legal Status of Sustainable Development in International Law
III. Economic Development
A. History of Special and Differential Treatment B. GSP
1. Overview
2. EC-Tariff Preferences
C. Limitation of “self-declaration” in the WTO IV. Social Development
A. Labor Rights and the WTO B. Article XX of the GATT V. Environmental Protection
A. Negotiations of Fisheries Subsidies in the WTO B. Agreement on Subsidies and Countervailing Measures
C. Special and Different Treatment for Small Vulnerable Countries VI. Conclusion
I. Introduction
There is no doubt that the importance of sustainable development is increasing, and
sustainable development has become an important part of international law. Schrijver stated that sustainable development, “conservation of the environment and the opportunity for every person to develop him or herself, now and in the future” becomes the core value of the international community in international law.1 Sustainable development is not an issue of a group of States or some organizations, but it is for a whole human community. As a member of a human community, we have common responsibility for future generations. Cordonnier Segger and Judge Weeramantry stated ‘sustainable justice’, implies that “such justice should be founded upon good faith recognition of a duty towards the present generation throughout the world, so that their needs can be equitably met, and also respect for the interests of future generations”.2
Even though an environmental issue is one of the main parts of sustainable development, environmental protection is not the only constitution of sustainable development. There are three pillars of sustainable development: economic development, social development and environmental protection.3 The integration of “intergenerational (environmental protection) and intragenerational (fair economic and social development) equity” can lead to sustainable development.4 Sustainable development cannot be achieved by one of those elements, but an integrated approach is essential. Additionally, sustainable development can be a ‘conceptual bridge’ between the right of social and economic development and the need of environmental protection.5
There is the widely accepted definition of sustainable development by Brutland, which is the development that “meets the needs of the present without compromising the ability of future generations to meet their own needs”.6 However, this does not mean that the concept of sustainable development is not controversial anymore, and the sustainable development has
1 Schrijver, Nico. The Evolution of Sustainable Development in International Law: Inception, Meaning and
Status. Martinus Nijhoff, 2008, p.29
2 Segger, Marie-Claire Cordonier, and C. G. Weeramantry. Sustainable Development Principles in the
Decisions of International Courts and Tribunals 1992-2012. Routledge, 2017, p.4
3 World Trade Organisation (WTO), Report of the World Summit on Sustainable Development. WT/CTE/W/220/Rev.1, 20 Dec. 2002, para.5.
4 Barral, Virginie. “Sustainable Development in International Law: Nature and Operation of an Evolutive Legal Norm.” The European Journal of International Law, vol. 23, no. 2, 2012, pp. 377–400.,
doi:10.1093/ejil/chs016., pp.380.
5 Segger, Marie-Claire Cordonier, and C. G. Weeramantry (n 2) p.5.
6 Brundtland, G. Report of the World Commission on Environment and Development: Our Common Future. 1987.
faced obstacles to implement in the real world. The role of international law and international institutions becomes more important to implement the concept of sustainable development in practice, and the World Trade Organization (‘WTO’) is one of the main organizations for sustainable development, because the WTO rules are related to all of the economic, social and environment parts.
This article analyzes what kind of WTO rules exist to promote sustainable development and whether they are effective in practice. It consists of four parts. The first part explains the meaning of sustainable development and the evolution of the concept in public international law. It also deals with the legal status of sustainable development with various views. Then, it discusses the concept of sustainable development in the WTO. The next three parts analyze the WTO rules in economic, social and environmental dimensions, respectively. In each part, there is one sub-topic for one Part. In all parts, firstly, how the concepts have emerged in the WTO is discussed, then the implication of them is assessed. In Part three, this article
illustrates the ‘Special and Different Treatment’ (‘SDT’) principle, especially the Generalized System of Preference (‘GSP’) with the current issues regarding ‘differentiation’ of
developing countries criteria. Part four explores the protection of the labor rights in the WTO rules. In this Part, it is mainly discussed whether labor standards can be applied the
exceptional clauses under Article XX(a) and (b) of General Agreement on Tariffs and Trade (‘GATT’). Lastly, Part five deals with fisheries subsidies in the WTO as an environmental part. Specifically, the various proposals regarding fisheries subsidies by WTO Members and the issue of special and different treatment for small vulnerable countries are discussed in this Part.
II. Sustainable Development in International Law A. A Brief History of Sustainable Development
United Nations Conference on the Human Environment
In 1960s, as more and more countries have become industrialized, the concern about
environmental problem increased. As a respond, in 1972, the United Nations Conference on the Human Environment was held in Stockholm (‘Stockholm Conference’). As an
achievement of the conference, a lot of environmental ministries and agencies were established in more than 100 countries, and the number of non-governmental organization
(‘NGO’), focusing the environmental issues, was significantly increased.7 Additionally, the Declaration on the Human Environment (‘Stockholm Declaration’) was released, and it deals with the relationship between development and environment in Principles 6 to12, which states that “economic and social development is essential for a good human environment and that the correction of environmental failings caused by underdevelopment and natural
disasters requires greater financial and technical aid”.8 World Commission on Environment and Development
After the Stockholm Conference, there was the Stockholm +10 Conference in Nairobi, Kenya in 1982. In the conference, the World Commission on Environment and Development
(‘WCED’) was established, which published the WCED Report, Our Common Future, in 1987 by Brutland. The report includes the widely accepted definition of sustainable development, which is the development that “meets the needs of the present without compromising the ability of future generations to meet their own needs”.9 The report also dealt with the relationship between the environmental issues and economy.10
United Nations Conference on Environment and Development
In 1992, the United Nations Conference on Environment and Development (‘UNCED’), also known as the ‘Earth Summit’ or the ‘Rio Conference’, was held in Rio de Janeiro, which focused on sustainable development. In the WTO report, the secretariat stated that the Rio Conference had an important role in setting a new agenda for sustainable development.11 The objective of Rio Conference was included in the founding charter of WTO.12 The main result of the Rio Conference was the Rio Declaration on Environment and Development 1992 (‘Rio Declaration’) and Agenda 21 which suggested the comprehensive work program to
implement the Rio Declaration.13
The main issue of the conference was the relationship between environmental protection and social and economic development. Unlike the Stockholm Declaration, the Rio Declaration
7 Hens, L., and B. Nath. “The Johannesburg Conference.” The World Summit on Sustainable Development, pp. 1–33., doi:10.1007/1-4020-3653-1_1, p.11.
8 Schrijver, Nico (n 1) p.44 and 45.
9 Brundtland, G. Report of the World Commission on Environment and Development: Our Common Future. 1987.
10 Hens, L., and B. Nath (n 5) p.11. 11 WTO (n 3) para. 8.
12 Schrijver, Nico (n 1) p.24.
13 The Rio Declaration on Environment and Development (1992). United Nations (UN), 1992. [hereinafter ‘Rio Delcaration’]
has a more “human-centered” approach.14 Principle 1 of the Rio Declaration states that “human beings are at the centre of concerns for sustainable development”, and “in order to achieve sustainable development, environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it” in Principle 4 of Rio Declaration, which shows the main concern of the Rio Conference.
When negotiating in Rio Conference, there was a conflict of interests between developed and developing countries. The focus of developed countries is on environment to meet the needs of both environment and development, while developing countries focused primarily on the right to development.15 There are some Principles regarding this issue. Principle 3 mentions “the right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations”, and in Principle 5, the cooperation for poverty eradication was emphasized. Additionally, Principle 6 mentions “special priority” for developing countries and “common but differentiated responsibilities” was recognized in Principle 7.
“Common but differentiated responsibility” can be divided into two parts, common responsibility and differentiated responsibility. It is a general idea that all States have
common responsibility “to conserve, protect and restore the health and integrity of the Earth's ecosystem” as members of the international community.16 On the other hand, there is
differentiated responsibility, which depends on the “contributions to global environmental degradation”.17 There is an argument that this differential responsibility is based on the principle of equity, which has a purpose “to restore an equality that was disrupted unilaterally and arbitrarily”.18 In response to the question of what is the legal base for bearing “historic responsibility”, it can be an answer that since the current generations have already benefited from what their ancestors do with the resources of the Earth, they are required to be
14 Nanda, Ved P. "Sustainable Development, International Trade and the Doha Agenda for Development."
Chapman Law Review, 8, 2005, pp. 53-76. HeinOnline, https://heinonline.org/HOL/P?
h=hein.journals/chlr8&i=57, p.59 15 Ibid, p.56
16 Rio Declaration (n 13) Principle 7. 17 Ibid.
18 Matsui, Yoshiro. “Some Aspects of the Principle of ‘Common but Differentiated Responsibilities.’”
International Environmental Agreements: Politics, Law and Economics, vol. 2, no. 2, 2002, pp. 151–170.,
responsible for that.19 Principle 16 of the Rio Declaration, the “polluter-pays principle”, was made based on “differentiated responsibility”.
In addition, Principle 15, the precautionary principle, is also one of the important clauses in the Rio Declaration. It was not a new concept in international law. It was in the first North Sea Conference (1984), and the element of the precautionary principle was in earlier treaties, such as Article XX(b) or (g) of the GATT, which requires scientific evidence of a risk.20 The main elements of precautionary principle is “scientific uncertainty and the anticipation of possible environmental damage”.21 The precautionary principle can be crucial, because based on this principle, States can be allowed to take trade-restrictive measures for environmental reasons just with ‘risk’ of harm, not the real environmental harm.
The Rio Declaration emphasized international cooperation and public participation, which can see in Principles 5, 7, 9, 12 and 14.22 Among these Principles, Principle 12 concerns international trade. In this Principle, States are required to cooperate regarding the economic system, since economic development and sustainable development can be a better solution for environmental issues.23 Furthermore, Principe 12 shows the concern of developing States, that developed States could implement trade measures, which have “arbitrary or unjustifiable discrimination or a disguised restriction” with the excuse of environmental protection.24 World Summit on Sustainable Development
In 2002, the World Summit on Sustainable Development (‘Johannesburg Summit’) was held in Johannesburg. The main objective of the Johannesburg Summit was to review the
achievement of the progress in the implementation of the Rio Conference.25 At the Summit, three main elements, economic development, social development and environmental protection were clearly identified as equal pillars of sustainable development, and the Johannesburg Summit emphasized that the achievement of sustainable development is
19 Rajamani, Lavanya. “The Principle of Common but Differentiated Responsibility and the Balance of Commitments under the Climate Regime.” Review of European Community & International
Environmental Law, vol. 9, no. 2, 2000, pp. 120–131., doi:10.1111/1467-9388.00243, p.122.
20 Schrijver, Nico (n 1) p.185. GATT Article XX (b) necessary to protect human, animal or plant life or health; (g) relating to the conservation of exhaustible natural resources if such measures are made effective in
conjunction with restrictions on domestic production or consumption. 21 Ibid, p.187.
22 Nanda, Ved P (n 14) p.59.
23 Rio Declaration (n 13) Principle 12. 24 Nanda, Ved P (n 14) p.60.
25 Marong, Alhaji B.M. "From Rio to Johannesburg: Reflections on the Role of International Legal Norms in Sustainable Development." Georgetown International Environmental Law Review, vol. 16, no. 1, 2003, pp. 21-76. HeinOnline, https://heinonline.org/HOL/P?h=hein.journals/gintenlr16&i=31, p.28.
essential to resolve poverty eradication; the shift from unsustainable patterns of production and consumption; and protecting and managing the natural resources.26 At the Stockholm and Rio Conferences, there were negotiations between the North and South countries while at the Johannesburg Summit, there was consensus over the three objectives of sustainable
development and it led to reconcile the priorities of developed and developing countries.27
B. Legal Status of Sustainable Development in International Law
As sustainable development has been recognized widely, the debate of the legal status of it has increased, and there are several views regarding it. First, many scholars and international lawyers argue that the concept of sustainable development is still too vague and ambiguous, so it is hard to see that it has legal significance or normative status.28 They also state that even though the concept of sustainable development has become important, it is mainly contained in the preamble, and it is not binding.29 The second view is that sustainable development already has normative status, and it has been crystallized regarding environmental conduct, so rather its implementation should be discussed.30 In fact, sustainable development has been mentioned in countless non-binding international legal document and the expression of sustainable development is also found in international treaties, which shows that there is a certain level of consensus regarding the legal status of sustainable development in
international law.31 Third, there is an argument that sustainable development has become a new rule of customary international law.32 In general, customary international law requires state practice and opinio juris. Some legal scholars criticized that even though there is state practice to support the concept of sustainable development, it is difficult to argue that there is opinio juris for the practice.33 The fourth perspective is that sustainable development cannot be primary rule, but it has normative character ‘as an element of the judicial reasoning process’, which is called as ‘interstitial norms’ argued by Lowe.34 According to this view,
26 Ibid, p.31. 27 Ibid.
28 Marong, Alhaji B.M. (n 25) p.44. 29 Barral, Virginie (n 4) p.384. 30 Marong, Alhaji B.M. (n 25) p.44. 31 Barral, Virginie. (n 4) pp.383 and 384. 32 Ibid.
33 Marong, Alhaji B.M. (n 25) p.48. 34 Barral, Virginie (n 4) p.389.
sustainable development does not regulate the legal entity directly, but ‘rather establish the relationship between primary norms’ and is used as a tool for judges with its normativity.35 As mentioned, general practice of the state and opinio juris must be shown to construct customary law. For state practice of sustainable development, “broad ratification of treaties on sustainable development; the records or travaux préparatoires of international
negotiations and conferences which document formal statements by state representatives; votes and other acts in the UN General Assembly and other international organizations; and the pleadings of states before international tribunals and legal opinions by governmental lawyers” can be included.36 The evidence of state practice in sustainable development can be shown clearly. For example, there are ratifications of treaties which have more than 190 parties such as the United Nations Framework Convention on Climate Change (UNFCCC), the United Nations Convention on Biological Diversity (UNCBD) and the United Nations Convention to Combat Desertification and Drought (UNCCD), which have “significant obligations on the sustainable development”.37 Additionally, the ICJ recognized the significance of sustainable development and its inclusion in the treaties.38 In Gabčíkovo-Nagymaros Project, the Judge Weeramantry stated that “the principle of sustainable development is thus a part of modern international law by reason not only its inescapable logical necessity, but also reason of its wide and general acceptance by the global
community”.39 Moreover, he stated that it is “more than a mere concept, but as a principle with normative value which is crucial to the determination of this case.”, and he emphasized the role of sustainable development as the principle of reconciliation in international law.40 In Pulp Mills, the Court examined whether the balance between the economic and
environmental reason at the present case is consistent “with the objective of the sustainable development”.41 This shows that sustainable development is perceived as an objective of international community that legal subjects must ‘strive to achieve’.42
35 Ibid.
36 Segger, Marie-Claire Cordonier. “Sustainable Development in International Law.” Routledge Handbook of
International Law, 2009, pp. 355-374., doi:10.4324/9780203884621.ch25, p.363.
37 Ibid. 38 Ibid, p.386.
39 International Court of Justice (‘ICJ’), Gabčíkovo-Nagymaros Project (Hungary/Slovakia), pp.88-116 (Separate Opinion of Vice-President Weeramantry). 25 September 1997, p.95.
40 Ibid. pp.85 and 87.
41 ICJ, Pulp Mills on the River Uruguay (Argentina v. Uruguay), Judgement, 20 April 2010, para. 177. 42 Barral, Virginie (n 4) p.390.
Then, the question to solve is whether the evidence of opinio juris can be found. The evidence is included in “expressions of belief regarding acts of international organizations and other international meetings; statements made by representatives of states, and the conclusion of treaties”.43 In fact, the Rio Declaration and the Agenda 21 are not binding, but ‘soft law’. However, ‘soft law’ can be also the evidence, because it leads to legitimate expectations to the states to be act in accordance with such commitments.44 Therefore, the legal status of sustainable development as customary international law is still controversial, but it can argued, and it is needed to be accepted in order to implement the concept of sustainable development in practice.
C. Sustainable Development in the WTO
The Marrakech Agreement Establishing the World Trade Organization (‘WTO Agreement’), includes the term sustainable development in its preamble:
“relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in
accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development,”45
It shows the link between the WTO and sustainable development, and it indicates that sustainable development also includes economic and social development. Even though it implies the significance of sustainable development in the WTO, it does not make a legal rule.46 Then in 2001, the Doha Round was launched, which is known as the Doha
Development Agenda (‘DDA’). The Doha Ministerial Declaration emphasized the aim of sustainable development stated in the WTO Agreement, and it stated that the aims of
‘upholding and safeguarding’ multilateral trading system and protecting environment must be ‘mutually supportive’.47 In paragraph 51, the Committee on Trade and Development (‘CTD’)
43 Segger, Marie-Claire Cordonier (n36) p.364. 44 Ibid, p.365.
45 WTO, Marrakech Agreement Establishing the World Trade Organisation, 14 April 1994, https://www.wto.org/english/tratop_e/envir_e/issu5_e.htm.
46 Lydgate, Emily Barrett. “Sustainable Development in the WTO: from Mutual Supportiveness to Balancing.”
World Trade Review, vol. 11, no. 4, 2012, pp. 621–639., doi:10.1017/s1474745612000341, p.624.
47 WTO, Doha Ministerial Declaration, 14 November 2001,
https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm. [hereinafter ‘Doha Declaration’] para.16.
and the Committee on Trade and Environment (‘CTE’) were instructed “to identify and debate developmental and environmental aspects of the negotiations, in order to help achieve the objective of having sustainable development appropriately reflected”.48
The WTO emphasizes the importance of the relationship between trade liberalization and sustainable development.49 The interpretation of sustainable development in both the WTO Agreement and the Doha Declaration is positive, but there is a subtle difference.50 The WTO Agreement stated that “there should not be any policy contradiction between trade opening and sustainable development” while the Doha Declaration stated that “these goals can and must be mutually supportive”.51 This shows that the approach has changed so that the trade and sustainable development should have supportive relationship.
The meaning of sustainable development in the WTO can be seen also in cases of the WTO dispute settlement, and it shows the implementation of sustainable development in practice. In the Appellate Body (‘AB’) Report of US-Gasoline52, even though the term ‘sustainable development’ was not mentioned, the AB cited the WTO Agreement.53 The AB stated that “the General Agreement is not to be read in clinical isolation from public international law”, which shows that the meaning of sustainable development in the WTO can be interpreted as common international law definitions.54 In the AB Report of the US-Shrimp55, the AB held that the preamble “must add colour, texture and shading to our interpretation of the
agreements annexed to the WTO Agreement”.56 This indicates that the AB recognized WTO Members intentions in the preamble regarding sustainable development, and the
interpretation of the WTO rules must be in accordance with the objective in the preamble of the WTO Agreement.57 Furthermore, in the US-Shrimp, the AB recognized the concept of sustainable development, and the AB stated in the footnote that sustainable development “has been generally accepted as integrating economic and social development and environmental
48 Ibid, para.51.
49 Lydgate, Emily Barrett (n 46) p.630. 50 Ibid.
51 Ibid.
52 WTO, United States — Standards for Reformulated and Conventional Gasoline-Appellate Body Report, 29 April 1996, WT/DS2/AB/R.
53 Lydgate, Emily Barrett (n 46) p.625. 54 Ibid. p.630
55 WTO, United States — Import Prohibition of Certain Shrimp and Shrimp Products-Appellate Body Report, 12 October 1998, WT/DS58/AB/R.
56 Ibid, para. 153. 57 Ibid.
protection”, which shows the AB acknowledged the three pillars of sustainable development.58
III. Economic Development
Economic growth is an inevitable element of sustainable development, and all states have different levels of economic growth. In order to achieve an economic objective for
sustainable development, economic development in developing countries and LDCs is crucial, and promoting the trade of those countries can lead to economic growth. The general method to promote the trade is that developed countries can provide preferential treatment for developing countries and LDCs. However, there are two fundamental principles in the WTO that can conflict with the special treatment for certain Membes: nondiscrimination and reciprocity.59 The principle of nondiscrimination can be seen in Articles I and III GATT, which are Most-favoured-nation (‘MFN’) and National Treatment. The MFN principle makes Member States impose non-discriminatory tariffs to all Member States, which is for ‘formal equitability’. However, since all Member States have different levels of economic
development, there are exceptions for them to achieve the fundamental economic goals of developing countries. There is favoured treatment, which can be justified as an exceptions of MFN clause, for ‘substantive equality’ between developed countries and developing
countries.60 Additionally, with regards to reciprocity, there is a non-reciprocal principle in Article XXXVI(8) of the GATT, which implies that ‘developing countries would not be expected, in the course of trade negotiations, to make contributions inconsistent with their individual development, financial and trade needs’.61 One of the preferential treatments for developing countries in the WTO is ‘Special and Different Treatment’ (‘SDT’). Part three deals with the concept of SDT, the implementation of SDT and the limitations with recent issues.
58 Ibid, para. 129.
59 Hoekman, Bernard. “The WTO: Functions and Basic Principles'', in B.Hoekman, P. English and A. Mattoo (eds), Development, Trade and the WTO: A Handbook (Washington, D.C.: World Bank), 2002, p. 42. There are five fundamental principles of the WTO: nondiscrimination, reciprocity, enforceable commitment, transparency and safety values.
60 Yanai, Akiko. “Rethinking Special and Differential Treatment in the WTO.” Institute of Developing
Economies, 2013, p.9.
61 Keck, Alexander, and Patrick Low. “Special and Differential Treatment in the WTO: Why, When and How?” WTO Staff Working Paper, No. ERSD-2004-03, 2004, p.3.
A. History of the Concept of Special and Differential Treatment
After the creation of the GATT in 1948, there were sessions of the GATT Contracting Parties from 1948 to 1956. After the twelfth session, the Haberler Report was released in 1958, which had the view that ‘developing country export earnings were insufficient to meet development needs and focused primarily on developed country trade barriers as a significant part of the problem’.62 In 1965, Part of the GATT, which consisted of three Articles on Ⅳ ‘Trade and Development’, was established with the combined backgrounds of the creation of the United Nations Conference on Trade and Development (‘UNCTAD’); newly independent states such as decolonized countries in Africa, Asia and the Caribbean; the Cold War; and the significant role of the developing countries in the GATT.63 At the first session of UNCTAD in 1964, it was proposed that ‘all developing countries should be granted preferential tariff treatment from developed countries’.64 In Part of the GATT, Article Ⅳ ⅩⅩⅩⅥ:8 states ‘the developed contracting parties do not expect reciprocity for commitments made by them in trade negotiations to reduce or remove tariffs and other barriers to the trade of less-developed contracting parties’, which is the non-reciprocity principle.
In 1968, at the second session of UNCTAD, it adopted ‘a mutually acceptable system of generalized, non-reciprocal and non-discriminatory trade preferences which would be beneficial to the developing countries’, and a Special Committee on Preference set the details of the Generalized System of Preference (‘GSP’) programs.65 In 1979, the Decision on ‘Differential and More Favourable Treatment, Reciprocity and Fuller Participation of
Developing Countries’, known as the ‘Enabling Clause’, which provided a legal base for the GSP under the GATT, was adopted under GATT.66 SDT has been strengthened at the DDA. In the Doha Ministerial Declaration, paragraph 44 states that ‘we reaffirm that provisions for special and differential treatment are an integral part of the WTO Agreements’. At DDA, the SDT provisions in the WTO Agreements have been reviewed, and there were proposals by
62 Ibid, pp. 3 and 4. 63 Ibid.
64 McKenzie, Michael. “Case Note: European Communities–Conditions for the Granting of Tariff Preferences to Developing Countries.” Melbourne Journal of International Law, vol. 6, 2005, p. 4.
65 Ibid. In Footnote 3 to paragraph 2(a) of Enabling Clause, GSP is described as ‘a system of generalized, non-reciprocal and non-discriminatory preferences beneficial to developing countries.
66 Hasan, MD Mehedi. “Special and Differential Treatment in the WTO: Its Content and Competence for Facilitation of Development.” Nnamdi Azikiwe University Journal of International Law and Jurisprudence, vol. 7, 2016, p. 43.
developing countries: an emphasis of the importance of SDT on the multilateral trading system and legal binding-force for SDT.67
As a result of these processes, SDT has taken mainly three forms within the WTO legal system: preferential market access of developing countries in developed countries, a
modulation of commitments and technical assistance and other support.68 The SDT provisions in the WTO Agreements consist of six categories: provisions to increase trade opportunities of developing countries; provisions to safeguard the interests of developing countries; provisions of flexibility of commitments; provisions of transitional time periods; provisions of technical assistance and other support; and provisions for the least-developed countries (‘LCDs’).69 The purpose of SDT is to make developing countries have the greater priority in the trade process to increase world welfare through trade.70
There are nearly 150 SDT provisions in the WTO Agreements and Article ⅩⅧ and part IV of the GATT which are the fundamental provisions of SDT. Paragraph 2 of Article ⅩⅧ recognized the importance of implementation of ‘protective or other measures affecting imports, and that such measures are justified in so far as they facilitate the attainment of the objectives of this Agreement’.71 In addition, part IV of the GATT pursues the increase in participation of developing countries in trade.72
B. GSP
1. Overview
GSP, which allows preferential tariff treatment for developing countries, was authorized by the 1979 Enabling Clause. In fact, the tariff preferences to developing countries breach the MFN obligation, which is the fundamental principle of the WTO. In order to address the problem, 1971 Waiver Decision was adopted, which provided a 10-year waiver.73 Then, in
67 Yanai, Akiko (n 60) p.4 68 Ibid. p.2
69 Committee on Trade and Development, “Implementation of Special and Differential Treatment Provisions in
WTO Agreements and Decisions.”, WT/COMTD/W/77, 25 Oct. 2000, p.3.
70 Hasan, MD Mehedi (n 66) p. 45.
71 Article ⅩⅧ (2): “The contracting parties recognize further that it may be necessary for those contracting parties, in order to implement programmes and policies of economic development designed to raise the general standard of living of their people, to take protective or other measures affecting imports, and that such measures are justified in so far as they facilitate the attainment of the objectives of this Agreement.”
72 Hasan, MD Mehedi (n 66) p. 47. 73 McKenzie, Michael (n 64) p. 4.
1979, in the Enabling Clause, the Contracting Parties of the GATT 1947 decided to adopt GSP as a permanent scheme. In paragraph 1 of the Enabling Clause, Contracting Parties accept ‘differential and more favorable treatment to developing countries notwithstanding Article of the GATT 1947’, and paragraph 1 applies to ‘preferential tariff treatment Ⅰ
accorded by developed contracting parties to products originating in developing countries in accordance with the Generalized System of Preference’.74
2. EC-Tariff Preferences75
As mentioned above, GSP is allowed as an exception of MFN principle. However, there was an argument regarding discrimination among beneficiary developing countries. It was EC-Tariff Preferences, which was brought as a case before the WTO dispute settlement by India. The issue here was whether the Drug Arrangements of the European Communities (‘EC’), the measure at issue that gave preferential tariff scheme to specific developing countries with certain conditions was inconsistent with Enabling Clause.
Interpretation of ‘Non-Discriminatory’
The Panel and the AB held that the EC’s GSP scheme is inconsistent with the WTO law, but they made the decision based on different grounds. The main difference was the
interpretation of ‘non-discriminatory’ in footnote 3 to paragraph 2(a) of the Enabling
Clause76. The Panel stated that ‘non-discriminatory’ in footnote 3 requires that all developing countries should be beneficiaries for ‘identical preferential tariff’ under the GSP scheme in the same way, ‘except for the implementation of a priori limitations’.77
The AB reversed the Panel’s finding and suggested the different interpretation of the term ‘non-discriminatory’ with requirements. The AB held that in order to be consistent with paragraph 2(a) and footnote 3 of the Enabling Clause, “only preferential tariff treatment that is in conformity with the description ‘generalized, non-reciprocity and non-discriminatory’ treatment can be justified”.78 There was no doubt that preferential treatment is inconsistent
74 Enabling Clause, para.2(a).
75 Appellate Body Report, European Communities – Conditions for the Granting of Tariff Preferences to
Developing Countries, WT/DS246/AB/R, adopted 20 April 2004, DSR 2004:III
76 Enabling Clause, footnote 3 to paragraph 2(a): As described in the Decision of the CONTRACTING PARTIES of 25 June 1971, relating to the establishment of “generalized, non-reciprocal and non discriminatory preferences beneficial to the developing countries” (BISD 18S/24).
77 WTO, European Communities – Conditions for the Granting of Tariff Preferences to Developing
Countries-Panel Report, WT/DS246/R, adopted 20 April 2004, as modified by Appellate Body Report WT/DS246/AB/R,
DSR 2004:III, para. 7.161.
78 WTO, European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries-
with the description of ‘non-discriminatory’, but the interpretation of the term was different. The AB analyzed the meaning of ‘non-discriminatory’ with paragraph 3(c) of the Enabling Clause79, which interpreted as “authorizing preference-granting countries to ‘respond positively’ to ‘needs’ that are not necessarily common or shared by all developing
countries”.80 However, there were two requirements to authorize. First, the types of needs are confined to ‘development, financial and trade needs’. The AB held that the assessment for the existence of ‘development, financial and trade needs’ must be based on an objective standard set out ‘in the WTO agreement or in multilateral instruments adopted by international
organizations.81 The second requirement is that the needs of developing countries must be ‘positive’, which implies that ‘the response of a preference-granting countries must be taken with a view to improving the development, financial or trade situation of a beneficiary country’.82 This mandates a ‘sufficient nexus’ between the preferential treatment and the development, financial or trade need.83 Based on the interpretation, the AB reversed the Panel’s finding, but they held that the measure at issue of the EC was not in consistent with the Enabling Clause, because a “closed-list” of beneficiaries did not have standards for a status of beneficiaries, so the measure at issue could not be argued as a ‘non-discriminatory’ measure.84 Therefore, the AB concluded that the measure did not meet the requirements in footnote 3.
In this case, the Panel focused on the principle of "elimination of discriminatory treatment in international commerce" in order to achieve the objects and considered “the function of the term ‘non-discriminatory’ in footnote 3 is to prevent abuse caused by discrimination in the granting of GSP among developing countries”.85 In contrast, the AB emphasized that an interpretation must be in accordance with the object and purpose of promoting the trade of developing countries in the WTO agreement and the Enabling Clause.86
EU’s GSP+
79 Enabling Clause, para.3(c): shall in the case of such treatment accorded by developed contracting parties to developing countries be designed and, if necessary, modified, to respond positively to the development, financial and trade needs of developing countries.
80 WTO (n78) para.162. 81 Ibid, para.163. 82 Ibid, para.164. 83 Ibid.
84 Ibid, paras. 187 and 188.
85 WTO (n 77) paras.7.157 and 7.158. 86 WTO (n 78) para.169.
The current preferential trading regimes in EU for developing countries consist of three programs: ‘the General GSP arrangements’, ‘the GSP+ regime’ and the ‘Everything But Arms program’, which is for the LDCs with a more generous GSP scheme.87 Among them, GSP+ was renewed after the EC-Tariff Preferences case, explained in Part three. The GSP+ regime is ‘the special incentive arrangement for sustainable development and good
governance’ for developing countries with conditions related to ‘human rights, labour rights, protection of the environment and good governance’.88 EU made the standard for
beneficiaries, so in order to qualify for the GSP+, a country must 1) be “considered to be vulnerable due to a lack of diversification and insufficient integration within the international trading system”; and 2) “have ratified all the conventions listed in Annex VIII and the most recent available conclusions of the monitoring bodies under those conventions do not identify a serious failure to effectively implement any of those conventions”.89 Besides, EU has transparent procedures with conditions in order to address the closed-list concern after EC-Tariff Preferences. However, GSP+ regime is also criticized because of its conditionality, and there is also an argument that EU rarely withdraws the special treatment even though there is breach of labor standards.90
C. Limitation of “self-declaration” in the WTO
One of the recent issues regarding SDT is which country deserves to be a beneficiary of SDT. Basically, the WTO has applied ‘self-declaration’ to have the status of developing countries. The WTO states that there is no agreed definition of ‘developing countries’ and ‘developed countries’, and “Members announce for themselves whether they are ‘developed’ or
‘developing’ countries”.91 With regards, there have been critiques regarding
‘self-declaration’. When providing SDT, the beneficiaries of SDT are developing countries, so it is important to define developing countries. The US raised an argument with this issue that this self-declaration can lead to ‘unpredictable and illogical results’ in the world trade system
87 Wardhaugh, Bruce. “GSP+ and Human Rights: Is the EU's Approach the Right One?” Journal of
International Economic Law, vol. 16, no. 4, 2013, pp. 827–846., doi:10.1093/jiel/jgt031, p.829.
88 Regulation (EU) No. 978/2012 of the European Parliament and of the Council of 25 October 2012 applying a scheme of generalized tariff preferences and repealing Council Regulation (EC) No. 732/2008, Recital 11. 89 Wardhaugh, Bruce. (n 87) p.831.
90 Ibid.
91 “Who Are the Developing Countries in the WTO?” WTO, www.wto.org/english/tratop_e/devel_e/d1who_e.htm.
operated by the WTO agreements,92 and it suggested to differentiate among developing countries to distinguish the countries which do not avail of SDT from self-declared developing countries, which is ‘differentiation’.93
The US Arguments
The US proposed the draft named ‘An Undifferentiated WTO: Self-declared Development Status Risks Institutional Irrelevance’94 to the WTO in 16 January of 2019. In the proposal, the US showed the development of certain developing countries since 1995 through
indications of the Human Development Index (‘HDI’), which includes life expectations, education and per capita income as indicators; several macroeconomic indicators, such as economic production, per capita income, agriculture and urbanization; trade data including total exports and high-technology trade; foreign direct investment (‘FDI’); corporate size; supercomputers; space; and defense.95
Based on the indications, the US pointed out that some countries, such as China and India, have developed significantly since 1995, while the WTO still have three categories, developed countries, developing countries and LDCs, and regardless of how they have developed, they can stay as developing countries if they claim to be developing countries. The US showed the negative impact of self-declared developing countries in three parts: non-agriculture market access negotiation, non-agriculture negotiations and Committee on Trade and Development – Special Session (‘CTD-SS’) negotiations. In CTD-SS part, the US stated the function of SDT provisions recognized by most WTO Member States as ‘to help developing countries integrate into the multilateral trading system and reap the benefits of this system’, and the US pointed out that some developing countries abuse the provisions to ‘maintain policy space outside WTO rules’ and self-declaration has undermined ‘the predictability of WTO rules’.96
Moreover, the US suggested the list of countries which will not avail of SDT: A WTO Member that 1) is the Organization for Economic Cooperation and Development (‘OECD’) Member State or ‘has begun accession process to the OECD’, 2) is the Group 20 (‘G20’)
92 WTO General Council, “An Undifferentiated WTO: Self Declared Development Status Risks Institutional
Irrelevance, COMMUNICATION FROM THE UNITED STATES.”, WT/GC/W/757, 16 Jan. 2019., para. 4.4.
93 Kanth, Ravi. “China, India Respond Robustly to US Paper on ‘Differentiation.’” Third World Network, 15 Feb. 2019, www.twn.my/title2/unsd/2019/unsd190205.htm.
94 WTO (n 92). 95 Ibid, pp.3-7.
Member State, 3) is ‘classified as a “high income” country by the World Bank’, 4) ‘accounts for no less than 0.5 per cent of global merchandise trade’.97
Joint Draft of China, India, South Africa and Venezuela
In response to the draft of the US, China, India, South Africa and Venezuela released a joint draft, named ‘The Continued Relevance of Special and Differential Treatment in Favor of Developing Members to Promote Development and Ensure Inclusiveness’.98 They argued that ‘the persistence of the enormous development divide between the developing and developed Members of the WTO is reflected on a wide range of indicators’, and suggested the objective of SDT principle, which is to support sustainable development, employment expansion and poverty eradication through trade integration.99 Then, they stated ‘reversed SDT’, which implies that the actual beneficiaries of the SDT are developed countries.100
Moreover, they did not recognized the narrow approach to level of development, such as GDP, and broaden the meaning of development from economic growth to ‘expanding people’s capabilities’.101 In this context, developing countries still have capacity constraints, and the three capacities are explained: 1) the lack of negotiating capacity due to limited human resources, 2) the lack of coordinating capacity, which is necessary for multilateral trade negotiations in formulating unified strategies across the institutions, 3) the lack of negotiating and academically supporting capacity by experts and business communities.102 After the Drafts
A great number of developing countries and LDCs rejected the US proposal with an
argument that “the S&DT is a legitimate right open to all developing countries and enshrined in the [WTO Agreement].103 The Chinese Ambassador stated that the SDT is not charity for developing countries, but “the result of the painful negotiations in which developing
Members have paid a high price in exchange, and therefore an integral and indispensable part of the multilateral trade rules”.104 On 26 April, the US Trade Representative Ambassador sent
97 Kanth, Ravi. “US Unveils Draft GC Decision on Providing S&DT Only to LDCs.” Third World Network, 21 Feb. 2019, www.twn.my/title2/unsd/2019/unsd190208.htm.
98 WTO (n 92).
99 Ibid, paras 1.1 and 1.4. 100 Ibid, para.1.5 101 Ibid, para.3.1. 102 Ibid, para.3.4.
103 Kanth, Ravi. “US Unveils Draft GC Decision on Providing S&DT Only to LDCs.” Third World Network, 21 Feb. 2019, https://www.twn.my/title2/wto.info/2019/ti190302.htm.
a letter to trade ministers of developing countries with the direction of US President Donald Trump.105 In the letter, the US Trade Representative Ambassador reaffirmed their argument that ‘the practice of self-declaring as developing countries for availing [SDT]’ has impacted negatively on the WTO negotiations.106 The US keep arguing the forego SDT for certain countries, even though the strong objections by the developing countries.
The WTO has used the ‘self-declaration’ for the status of developing countries, and more than two thirds of the WTO Member States are developing countries.107 Based on the argumentation of the South Africa, the right to determine the definition of developing countries is for every Member State, and any States cannot argue the graduation from status of developing countries to other Member States.108 This indicates that it is difficult to conclude a new definition of developing countries by the WTO Members, not only because of conflicts between developed and developing countries but also because of conflicts among developing countries. Even though Members who declared as developing countries are in the same criteria, there are significant differences in several aspects including the level of
economic growth, and this causes conflicting interests of Members.109
In the case of LDCs, the WTO has recognized LDCs designated by the UN.110 The UN defines LDCs as “countries that have low levels of income and face severe structural impediments to sustainable development”.111 The Committee for Development Policy (‘CDP’) that is a ‘subsidiary advisory body of the United Nations Economic and Social Council (‘ECOSOC’)’ has reviewed the list of LDCs every three years.112 There are three criteria to define LDCs: gross national income (GNI) per capita; human assets index; and economic vulnerability index.113 In addition, based on the graduation thresholds determined by the CDP, the CDP recommends the graduation from the list of LDCs.114 Five countries,
105 Kanth, Ravi. “Trump steps up pressure on South to forgo S&DT.” Third World Network, 7 June 2019, https://www.twn.my/title2/wto.info/2019/ti190605.htm.
106 Ibid. 107 Ibid. 108 Ibid.
109 Cui, Fan. "Who Are the Developing Countries in the WTO." Law and Development Review, 1, 2008, pp. 123-152. HeinOnline, https://heinonline.org/HOL/P?h=hein.journals/ldevr1&i=123, p.130.
110 Ibid, p.135.
111 Handbook on the Least Developed Country Category: Inclusion, Graduation, and Special Support
Measures. United Nations, 2018, p.1.
112 Ibid, p.5. 113 Ibid. pp.6 and 7.
114 Ibid, p.7. See the webpage of the UN: “These recommendations are not exclusively based on the criteria scores, complementary country-specific information (DESA impact assessment, UNCTAD vulnerability profile) and the views of the government are also taken into account”.
Botswana, Cabo Verde, Maldives, Samoa and Equatorial Guinea, graduated from the list of LDCs by 2018.115
The list of LDCs has been well-defined and the procedure for the graduation from the criteria is also well-structed. ‘Self-declaration’ implies ‘self-graduation’ from the criteria of
developing countries, and it is difficult to be done by Member States in practice. For example, the Republic Korea is only Member State changing the status from developing States to States assisting development as becoming a member of the OECD Development Assistance Committee, but it still claims the status of developing countries at least in agriculture negotiations.116 This indicates that despite of the economic growth, most
developing countries would not choose to graduate from the status of developing countries. In fact, it is practically hard to make agreed definitions of developed and developing
countries and thresholds for graduation from the status of developing countries. However, in order to promote trade and economic growth effectively for sustainable development, further discussion by Members must be done.
IV. Social Development
The second pillar of the sustainable development is social development. Social dimension is more conceptual than other two dimensions. For sustainable development, improvements of ‘life of quality’ is needed, and elements of social dimension is enhancing human rights, labor rights and gender equality.117 The Preamble of the WTO Agreement also states that “their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living”. In the elements of social development, this article discusses the labor rights in the WTO. The labor rights are also directly related to the human rights such as enforced work or child labor, and the fulfillment of labor rights would lead to “raising
standards of living”.
Before discussing the labor rights in the WTO, the “fair labor standards” should be clarified. The ILO suggested that the fundamental rights are:
115 Ibid, p.4.
116 Suh, Jin Kyo, et al. Reshaping the Multilateral Trade Policy for Korea. Korea Institute for International Economic Policy, 2018, p.129.
117 Gazzola, Patrizia, and Elena Querci. “The Connection Between the Quality of Life and Sustainable Ecological Development.” European Scientific Journal, 2017, pp. 361–375. p.365.
“(a) freedom of association and the effective recognition of the right to collective bargaining;
(b) the elimination of all forms of forced or compulsory labour; (c) the effective abolition of child labour; and
(d) the elimination of discrimination in respect of employment and occupation”.118 The ILO standards are enforced to promote the “intrinsic value of human rights”.119
The labor standards also have important in the trade. Exports of products producing under low labor standards would result in a ‘race to the bottom’, which means that low labor standards could results in unfair competition, which will create negative effects on the other exporting countries with high labor standards.120 It seems likely that the developing countries would keep a minimal level of labor protection to have comparative advantages, and it is only able to be prevented by an international agreement.121
A. Labor rights in the WTO
After World War II, the International Trade Organization (‘ITO’) was established to
accomplish economic and political goals such as ‘reducing poverty and promoting peace’.122 The Havana Charter of 1948, the founding document of the ITO, provided for ‘Fair Labour Standards’ in Article 7, which stated that the members recognizes that ‘all countries have a common interest in the achievement and maintenance of fair labour standards related to productivity, and thus in the improvements of wages and working conditions’. This Havana Charter was not applied to the GATT, but there is just one explicit exception in Article XX (e) regarding ‘prison labour’. However, the provision did not cover other human rights such as child labors.
118 International Labour Organization (ILO), “ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up”, 18 June 1998 (Annex revised 15 June 2010).
119 Alben, Elissa. "GATT and the Fair Wage: A Historical Perspective on the Labor-Trade Link." Columbia
Law Review, vol. 101, no. 6, October 2001, pp. 1410-1447. HeinOnline, https://heinonline.org/HOL/P?
h=hein.journals/clr101&i=1454, p.1415.
120 Kagan, Joshua M. "Making Free Trade Fair: How the WTO Could Incorporate Labor Rights and Why It Should." Georgetown Journal of International Law, vol. 43, no. 1, 2011, pp. 195-224. HeinOnline,
https://heinonline.org/HOL/P?h=hein.journals/geojintl43&i=197, p.201; and Bal, Salman, "International Free Trade Agreements and Human Rights: Reinterpreting Article XX of the GATT" Minnesota Journal of
International Law, 191, 2001, p.64.
121 Kagan, Joshua M, p.202.
122 Mitro, Matthew T. "Outlawing the Trade in Child Labor Products: Why the GATT Article XX Health Exception Authorizes Unilateral Sanctions." American University Law Review, vol. 51, no. 6, August 2002, pp. 1223-1274. HeinOnline, https://heinonline.org/HOL/P?h=hein.journals/aulr51&i=1233, p.1230.
The US and other States had argued to make a social clause for the protection of labor rights, but the argument received little support until the Uruguay Round in 1994, because the
developing countries opposed with an argument that the International Labor Organization (‘ILO’) is more competent body for the issue rather than the WTO.123 At 1996 Singapore Ministerial Conference, even though Member States acknowledged the importance of
significance of trade in promoting core labor standards, but the pronouncement still reiterated that the ILO is a proper body to deal with these issues.124 The US and other States tried to expand the labor rights, but they failed again, because developing countries opposed it with an argument that provisions for labor rights would ‘disguise protectionist policies’ and prevent developing countries from having competitive advantage with labor costs.125
Even though the ILO is competent body to discuss labor standards, “this competence does not exclude the attribution of any competence concerning fair labor standards to the GATT”.126 The WTO allows trade sanctions when there are violations of the rules, which can make a bigger impact on labor rights than the ILO.127 However, it should be kept in mind that the WTO is a trade organization, not human rights organization, therefore, labor rights in the WTO must be restricted to the trade-related labor standards.128
B. Article XX of the GATT
The WTO have no provision directly protecting labor standards except for Article XX(e) concerning prison labor. However, there is Article XX of the GATT, which is an exceptional clause for general obligations in the GATT under certain grounds. Article XX permits the measures which is prohibited as a violation of MFN clause in Article I, ‘the elimination of the quantitative restrictions clause’ in Article XI or ‘non-discriminatory administration of
quantitative restrictions in Article XIII, when protecting legitimate objectives. These
exceptions must be applied in such a way which does not constitute ‘arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction on international trade’ under Article XX. The questions here is whether the recognized labor standards are able to be applied to Article XX of the GATT. If the labor rights are covered by
123 Kagan, Joshua M (n 120) p.198. 124 Ibid. 125 Mitro, Matthew T (n 122) p.1223. 126 Kagan, Joshua M (n 120) p.67. 127 Ibid. 128 Ibid.
Article XX, the general exceptions of the GATT would be used for the support of labor rights in the international trade. With regards, Articles XX (a) and (b) relating to public morals and human health can be related to the labor rights, so the question can be discussed with the two paragraphs.
Interpretation of the GATT
Before establishing the WTO Agreement, the GATT drafting history was crucial for GATT panels to decide claims regarding Article XX, because consensus adoption by the Party States is required for GATT Panel decision.129 This tendency has been lasted until the Uruguay Round Agreement was adopted.130 Article 3(2) of the Dispute Settlement Understanding (‘DSU’), the dispute settlement system of the WTO is ‘to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law’. It is generally accepted and recognized that the Vienna Convention on the Law of Treaties (‘VCLT’) reflects ‘customary rules on interpretation of international treaties’.131 Article 31 of the VCLT indicates the sources and methods for the interpretation. The source is mentioned in Article 31(2), which includes the text of the provision of the treaty and its preamble and annexes. The methods cover in Article 31(1) the ‘principle of good faith; attributing an ordinary meaning to a term; establishing the meaning in the context and in light of object and purpose of the treaty; and ascribing a specific meaning to a term if parties intended that’.132 Article 32 mentions ‘preparatory work of the treaty’ as the ‘supplementary means of interpretation’ to interpret a treaty properly.
However, the International Law Commission (‘ILC’) composing the VCLT stated that the means of interpretation explained in the four paragraphs of Article 31 did not indicate the hierarchy order.133 Moreover, regarding the relation between Article 31 and Article 32, the ILC noted that ‘means from Article 31 and means from Article 32 had not been divided by a rigid line’.134 When there is interpretative conflict ‘coming from two means cannot be reconciled’, it is impossible to resolve the conflict since there is no hierarchy between the
129 Mitro, Matthew T (n 122) p.1236. 130 Ibid.
131 Etinski, Rodoljub M. "A Critical Review of Interpretation of Articles III and XX of the Gatt 1994." Zbornik
Radova, vol. 52, no. 3, 2018, pp. 819-854. HeinOnline, https://heinonline.org/HOL/P?
h=hein.journals/zborrado52&i=855, p.822. 132 Ibid, p.823.
133 Ibid, p.824. See, Report of the ILC on the work of its eighteenth session, Geneva, 4 May – 19 June 1996,
The Yearbook of International Law Commission 2/1966, 219, para.8.
means suggested by the VCLT.135 A few years later, the ILC suggested for the interpreter to identify ‘the relevance of different means of interpretation in a specific case’ and to
determine ‘their interaction with the other means of interpretation in this case’ by weighing them ‘in good faith’.136
In general, the WTO dispute settlement body interprets the provision based on ‘ordinary meaning’ and ‘context’ as the VCLT and the ILC suggested, and it leads to a ‘dynamic interpretation’ of the GATT text.137 The interpretation of Article XX can be seen in the cases. In US-Gasoline, the AB cited the Article 31 of the Vienna Convention, and they stated that the provision is “general rule of interpretation”, and it “has attained the status of a rule of customary or general international law”, which is applied to clarify the provisions of the agreement in the WTO.138 The AB held that provisions shall be interpreted in accordance with “their ordinary meaning, in their context and in the light of the treaty’s object and purpose”139 Additionally, in US-Shrimp, the AB interpreted the words ‘exhaustible natural resources’ of Article XX(g) ‘in the light of contemporary concerns of the community of nations about the protection and conservation of the environment’.140 The AB considered the explicit
recognition by WTO Members of the objective of sustainable development in the preamble of the WTO Agreement.141 This dynamic interpretation by the AB indicates that the objective of sustainable development is the present concern of international community, and it can be used to interpret provision of the Article XX.
The Chapeau of Article XX
In US-Gasoline, the AB held that Article XX should be analyzed in two-tired: 1) whether the measure is justifiable by the provisions of Article XX; and 2) whether the measure is
consistent with the chapeau of Article XX.142 It indicates the sequence of the requirements of exceptions clause, but this article discusses the chapeau first to analyze the provisions in detail. The chapeau constitutes requirements: “such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade”. In
US-135 Ibid.
136 Ibid, p.825. See, Report of the ILC 2016 (A/71/10), p.131. 137 Mitro, Matthew T (n 122) p.1238. 138 WTO (n 52) p.17. 139 Ibid. p.18. 140 WTO (n 55) para.129. 141 Ibid, para.131. 142 Ibid. p.22.
Shrimp, the AB emphasizes the interpretation of the chapeau because of the location of “a line of equilibrium between the right of a Member to invoke an exception under Article XX and the rights of the other Members under varying substantive provisions”, and it stated that the location of the line of equilibrium is not “fixed or unchanging” and it can differ
depending on cases.143
Applicability of Article XX(a)
Article XX (a) is an exception for measures “necessary to protect public morals”. It is needed to define ‘public morals’.144 In US-Gambling145, the Panel defined that ‘public morals’, which is in Article XIV(a)146 of the General Agreement on Trade in Services (‘GATS’), as
“standards of right and wrong conduct maintained by or on behalf of a community or nation”.147 The Panel stated that the contents of ‘public morals’ can vary in time and space, depending upon a range of factors, including prevailing social, cultural, ethical and religious values”.148 This dynamic interpretation is also seen in US-Shrimp, as mentioned.149 This implies that the term ‘public morals’ must also be interpreted in the light of present concerns of the international community. With this dynamic interpretation, it can be argued that labor standards should be seen as ‘public morals’ in Article XX(a).
There are several approaches on the interpretation of the term ‘public morals’ in an
exceptional clause.150 The first one is ‘originalism’, which is to define the concept of ‘public morals’ with the meaning of the concept when the term was first incorporated into the
Agreements.151 However, as mentioned above, it is inconsistent with the Panel and AB, which stated the dynamic interpretation of the provision. The second approach is ‘universalism’, which requires universal or near-universal State practice of the WTO members showing the concept of morality.152 However, problems of this approach are also suggested that the
143 WTO (n 55) para.159. 144 Bal, Salman (n 120) p.76.
145 WTO, United States — Measures Affecting the Cross-Border Supply of Gambling and Betting
Services-Panel Report, 10 November 2004, WT/DS285/R.
146 Article XIV (a) necessary to protect public morals or to maintain public order. 147 Ibid, para.6.465.
148 Ibid, para.6.461.
149 Nachmani, Tamara S. "To Each His Own: The Case for Unilateral Determination of Public Morality under Article XX(A) of the Gatt." University of Toronto Faculty of Law Review, vol. 71, no. 1, Winter 2013, pp. 31-60. HeinOnline, https://heinonline.org/HOL/P?h=hein.journals/utflr71&i=31, p.41.
150 Jeremy C. Marwell, “Trade and Morality: The WTO Public Morals Exception after Gambling”, New York University Law Review, Vol. 81, 2006, pp. 802-842. Available at SSRN: https://ssrn.com/abstract=907393, p.819.
151 Ibid. 152 Ibid, p.820.
universalism would constrain the exception of ‘public morals’, and if there is universal consensus, the exception is no longer useful since ‘public morals’ exception is needed when the ‘public morals’ standards are different.153 The third approach is ‘multiplicity’, which requires widespread state practice such as labor standards.154 This approach is also too restrictive, because it does not include the exception ‘the unilateral actions of any State’.155 The fourth approach is ‘unilateralism’, which means that the ‘public moral’ exceptions depends on the definition by each State unilaterally.156 It also has a problem that it is hard to make the limitation of an acceptable scope of ‘public morals’, and it is incompatible with the treaty.157 Jeremy C. Marwell suggested an solution “to permit a country to define public morals unilaterally but to require evidence from that country supporting its claim that a particular issue has moral significance”.158
When it comes to labor rights, there is a widely accepted standard agreed by 187 ILO Members, but labor rights are still not protected such as forced labor or child labor. This indicates that we can see labor rights as ‘public morals’ with the near-universal standard of international organizations, and the labor standards should be applied to Article XX
exception as ‘public morals’ to promote the labor rights in some developing countries.
Applicability of Article XX(b)
Article XX(b) of GATT permits a trade-restrictive measure which is “necessary to protect human, animal or plant life or health”. It is clear that certain labor rights are directly linked to the ‘health risk’ in Article XX(b), but, like Article XX(a), Article XX(b) has not invoked for labor rights issues.159 However, it can be discussed whether labor rights are able to be used to justify trade-restrictive measure under Article XX.
153 Ibid. 154 Ibid, p.822. 155 Ibid. 156 Ibid, p.823. 157 Ibid. 158 Ibid, p.824. 159 Bal, Salman (n 120) p.79.
The EC-Asbestos160 was the first case of the WTO that fell under Article XX(b).161 The Panel examined the applicability in two steps: 1) the risk of the products at issue to public health and 2) the necessity of the measure to protect public health.162 First, the existence of risk should be established. The Panel examined the risk to public health based on ‘scientific evidence’.163 Like Article XX(a), Article XX(b) has ambiguity of the scope of public health to some extent, and the Article XX(b) is for health ‘risk’, which contains the meaning of
‘uncertainty’. However, the applicability to public health can be examined based on scientific evidence as it was done in EC-Asbestos. The scientific evidence can be suggested by the ILO or the World Health Organization. For example, there is child labor, which excludes children in employment who “are permitted light work and those above the minimum age whose works is not classified as a worst form of child labor, or in particular, as ‘hazardous
work’”.164 According to the ILO, 152 million children were in child labor worldwide, and half of them, 73 million children were in ‘hazardous work’, which “directly endangers their health, safety, and moral development” in 2016.165 This shows that the child labor, especially in hazardous work clearly poses the risk of public health.
The second step to examine the applicability is a ‘necessity test’, which requires “no less restrictive alternative that is sufficiently effective or reasonably available”.166 It is also applied to Article XX(a). The AB stated that “the objective pursued by the measure is the
preservation of human life and health through the elimination, or reduction, of the well-known, and life-threatening” and this value is “both vital and important in the highest degree”.167 Then, the AB examined the ‘necessity’ with a question, “whether there is an alternative measure that would achieve the same end and that is less restrictive of trade than a prohibition”.168 In order to invoke paragraphs (a) and (b) of Article XX, the measure must be met the necessity requirement.
160 WTO, European Communities — Measures Affecting Asbestos and Products Containing
Asbestos-Appellate Body report, 12 March 2001, WT/DS135/AB/R.
161 Segger, Marie-Claire Cordonier, and Markus W. Gehring. “The WTO and Precaution: Sustainable
Development Implications of the WTO Asbestos Dispute.” Journal of Environmental Law, vol. 15, no. 3, 2003, pp. 289–321., doi:10.1093/jel/15.3.289, p.290.
162 WTO (n 160) para.155. 163 Ibid. para.158.
164 ILO, Global estimates of child labour: Results and trends, 2012-2016, Geneva, 2017, p.21. 165 Ibid, pp. 5 and 13.
166 Segger, Marie-Claire Cordonier, and Markus W. Gehring. (n 161) p.314. 167 WTO (n 160) para.172.
