Protectionist Intent in WTO National Treatment Obligations
What is the main purpose of the WTO legal system? Is it to stop its members from protecting their domestic industries? Or is it about requiring them to regulate in a sensible manner, even if protectionism is not involved? These questions underpin one of the oldest debates in WTO law, which is whether WTO national treatment obligations should only prohibit measures which the regulating WTO member intended to protect domestic products or services from competition from imported products or services, or whether these obligations go further, and also prohibit measures that have protectionist (or discriminatory) effects, even without if they were adopted for protectionist reasons. Lorand Bartels Senior Lecturer in Law and Fellow of Trinity Hall, University of Cambridge
The reason that the debate continues, even today, is that the wording of the relevant obligations is singularly unhelpful. The policy underpinning the national treatment obligation in the GATT 1994 is set out in Article III:1, which states that measures ‘should not be applied to imported or domestic products so as to afford protection to domestic production’. But the phrase ‘so as to’ is ambiguous on the critical point: it can mean that there is an intention to afford protection or that there is merely an effect of affording protection. This does not always matter. The first sentence of Article III:2 of the GATT 1994 prohibits domestic taxes on imported products that are ‘in excess of ’ those imposed on domestic products. As the Appellate Body recognised in Japan – Alcoholic Beverages, its second report, a violation of this obligation does not depend on establishing, separately, that such a tax has a ‘protective application’ (whatever this might mean).
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Interpretive difficulties begin with the second sentence of Article III:2, concerning dissimilar taxes on ‘directly competitive or substitutable’ products (traditionally seen as a larger category than that of ‘like’ products). Such taxes are prohibited, but only when they are also contrary to the principles set out in Article III:1, namely, that they are applied so as to afford protection. On this point, the Appellate Body said in Japan – Alcoholic Beverages that ‘[t]his is not an issue of intent’. Rather, it is an issue of the ‘protective application’ of the measure, this being ‘most often discerned from the design, the architecture, and the revealing structure of a measure.’ But this does not answer the question whether, in looking at the measure, is one looking for evidence of intention or is one looking for evidence of likely effects. In Chile – Alcoholic Beverages the Appellate Body elaborated, by saying that ‘the statutory purposes or objectives – that is, the purpose or objectives of a Member’s legislature and government as a whole – to the extent that they are given objective expression in the statute itself, [may be] pertinent’. But not only in this dispute, but also in those that have followed, there have always been clear discriminatory effects. Two questions remain unanswered: does the second sentence of Article III:2 prohibit a measure that has discriminatory effects in the absence of an ‘objective’ protectionist intention? And does this provision prohibit a measure that has an ‘objective’ protectionist intention by not discriminatory effects? We do not know. When it comes to national treatment obligations applicable to regulatory measures, the relevant texts are not so much ambiguous as silent. Article III:4 of the GATT 1994, Article 2.1 of the TBT Agreement, and Article XVII of the GATS prohibit ‘less favourable treatment’ of imported as opposed to domestic products and services. This says nothing at all about whether ‘less favourable treatment’ depends on a protectionist