Whether GATT Art. XX can be an available defense against AP violation is a very complex issue. The main reason for such complexity is that the AP possesses a very unique legal nature. The AP consists of substantive obligations across the WTO realm. It does not contain a coherent set of rules on a single subject like other multilateral trade agreements in Annex 1A. Some AP rules contain obligations that are more stringent than the basic obligations in the WTO, while some require less stringent obligations. This unique legal nature should be taken in consideration in the interpretation process.
To assess whether GATT Art. XX is an applicable defense, it is crucial to discern the relationship between the AP and GATT Art. XX. One standardized clause in the AP states that the AP is an integral part of the WTO Agreement. On the ground of this integral clause, this thesis proposes to read the AP with the relevant rules under the WTO Agreements, including the relevant exceptions, as a whole. For example, when an AP obligations is closely related to or built upon an obligation under the GATT, the AP obligation should be read together with the GATT, including GATT Art. XX. Thus, GATT Art. XX is an applicable defense for GATT-related AP obligations.
The interpretation proposed by this thesis will respect Members’ regulatory autonomy, which is confirmed and codified in GATT Art. XX. GATT Art. XX demonstrates Members’
rights to promote non-trade interests, such as public morals, human, animal or plant life or health, exhaustible natural resources, etc. This clearly manifests that the WTO aims to strike a balance between trade facilitation and non-trade public interests. As a result, public objectives listed in GATT Art. XX may take priority over trade interests. This thesis considers that this conscious choice of value by WTO Members should still be respected when it comes to the non-GATT obligations that are in fact built upon or related to the GATT. Although the
138
reference to “this Agreement” under GATT Art. XX might seem to refuse applying GATT Art.
XX outside the scope of the GATT, this thesis does not see the reference to “this Agreement”
as an obstacle to applying GATT Art. XX under non-GATT context. This thesis believes that whether GATT Art. XX is applicable hinges on the breached AP provision, rather than GATT Art. XX. That is to say, when Members agree the recourse to GATT Art. XX in the AP, the reference to “this Agreement” in GATT Art. XX will not be a hindrance.
Recently, the WTO judiciary has been challenged with this issue in two cases, i.e.
China – Publications and Audiovisual Products and China – Raw Materials. In China – Publications and Audiovisual Products, the Panel avoided answering the applicability question. The Panel employed the assuming arguendo approach. That is, the Panel assumed that GATT Art. XX is an applicable defense against violation of the AP and directly examined the merits of GATT Art. XX. The Panel reached the conclusion that China did not fulfill the requirements under GATT Art. XX and therefore the Panel did not need to address the applicability issue.
The AB in China – Publications and Audiovisual Products rejected the Panel’s assuming arguendo approach and dealt with the issue head-on. The AB confirmed the availability of GATT Art. XX because the breached provision, paragraph 5.1 of China’s AP, presents a textual link to the GATT. According to the AB, the introductory clause of paragraph 5.1, which reads that “without prejudice to China’s right to regulate trade in a manner consistent with the WTO Agreement,” incorporates GATT Art. XX defense into the paragraph 5.1. As a result, GATT Art. XX is an applicable defense against the violation of paragraph 5.1 of China’s AP.
In contrast, the applicability of GATT Art. XX in China – Raw Materials was rejected for a lack of textual reference. The Panel and AB heavily relied on the textual interpretation
139
conducted by the AB in China – Publications and Audiovisual Products and tried to find a textual link in paragraph 11.3, the breached provision under China’s AP. Unlike paragraph 5.1, paragraph 11.3, does not contain an incorporation clause similar to the one in paragraph 5.1 and does not make any textual reference to the GATT, either. Unable to find a textual reference, the Panel and AB in China – Raw Materials refused the applicability of GATT Art.
XX.
Reading these two cases together, it is clear that with respect to applying GATT Art.
XX in the AP or non-GATT context, WTO judiciary highly values the textual incorporation by means of reference. Anything short of such clear textual linkage will lead to a negative answer on the applicability question. In a word, the WTO judiciary considers that there are two occasions where GATT Art. XX is an available defense: 1. violation of the GATT and 2.
violation of a non-GATT provision that incorporates GATT Art. XX by means of textual reference.
The reasoning of China – Publications and Audiovisual Products and China – Raw Materials is subject to severe criticisms in academia. The reasoning is mainly criticized for its strict textualist interpretation and for overlooking the unique legal nature of the AP and the systemic relationship between the AP obligations and GATT Art. XX. As mentioned earlier, the AP contains obligations that deviate from the basic WTO disciplines. Hence, with respect to the applicability issue, it is crucial to interpret AP obligations in their systemic position, which will be further elaborated in the next paragraph. Most importantly, the strict textual interpretation adopted by the WTO judiciary leads to unreasonable and undesired consequences. Take China’s AP as an example. Paragraph 5.2 of China’s AP follows up 5.1 and regulates that except as otherwise provided for in China’s AP, all foreign individuals and enterprises, including those not invested or registered in China, shall be accorded treatment no
140
less favorable than that accorded to enterprises in China with respect to the right to trade.
Following the restrictive interpretation of the AB, violation of paragraph 5.2 cannot be justified by GATT Art. XX because the paragraph does not have an introductory clause that incorporates or makes reference to the GATT. However, paragraph 5.1 and 5.2 share a very close relationship. Paragraph 5.2 is built upon 5.1 and regulates the same subject matter, i.e., trading rights. The AB’s textual interpretation will render an unreasonable result that depriving enterprises in China, including domestic and foreign enterprises, of their trading rights can be justified by GATT Art. XX whereas depriving foreign individuals and enterprises, including those not invested or registered in China, of their trading rights cannot.
In addition, the WTO judiciary did not examine the object and purpose of the WTO Agreements and neither did they consider the circumstances of conclusion of the AP.
This thesis opposes over-reliance on texts of an AP provision because it is more likely that the applicability issue was ever envisaged or discussed by Members during the negotiation. Thus, it is unlikely that texts can provide a decisive guidance on this issue. This thesis argues that the WTO judiciary should conduct a holistic analysis by taking into account of factors provided in VCLT Art. 31 and 32. Among them, a contextual analysis is of crucial importance as this issue involves a cross-agreement application. In addition, the unique legal nature and arrangement of the AP requires a contextual interpretation on the AP obligations.
This thesis suggests a different contextual analysis from that performed in China – Raw Materials. This thesis proposes to read contexts on a broad scale by reading the AP obligations and its relevant, basic disciplines under the WTO Agreement together.
Accordingly, this thesis proposes that when the breached AP obligation is intrinsically linked to or built upon the obligations under the GATT, GATT Art. XX should be an available defense unless such defense will defeat the very purpose of the breached obligation. This contextual reading respects the purposes of the WTO Agreement, too. The GATT clearly
141
denotes that non-trade values may outweigh trade interests provided that the measure is taken in accordance with GATT Art. XX. Furthermore, this interpretation follows the long established interpretative principle in the WTO judiciary, i.e. to interpret the WTO obligations in a coherent and harmonious way. Otherwise, it would be unreasonable that GATT Art. XX can justify basic obligations under the GATT, but not the more stringent AP obligations related to or built upon the basic GATT obligations. Thus, this thesis suggests that textual linkage is not the only available bridge between the AP and GATT Art. XX. A bridge can also be formed when the AP obligations are intrinsically related to or built upon the GATT obligations.
142
Bibliographies
WTO Cases:
[1] Appellate Body Report, China – Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R (Jan. 30, 2012).
[2] Panel Report, China – Measures Related to the Exportation of Various Raw Materials, WT/DS394/R, WT/D395/R, WT/D398/R (July 5, 2011).
[3] Appellate Body Report, China–Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Products and Audiovisual Entertainment Products, WT/DS363/AB/R (Dec. 21, 2009).
[4] Panel Report, China–Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Products and Audiovisual Entertainment Products, WT/DS363/R (Aug. 12, 2009).
[5] Appellate Body Report, United States – Customs Bond Directive for Merchandise Subject to Anti-Dumping/Countervailing Duties, WT/DS343/AB/R, WT/DS345/AB/R (July 16, 2008).
[6] Appellate Body Report, European Communities – Customs Classification of Frozen Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R (Sept. 12, 2005).
[7] Appellate Body Report, United States – Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R (Nov. 28, 2003).
[8] Appellate Body Report, Canada – Certain Measures Affecting the Automotive Industry, WT/DS139/AB/R, WT/DS142/AB/R (June 19, 2000).
[9] Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/AB/R (Dec. 14, 1999).
[10] Panel Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/R (June 25, 1999).
[11] Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding Portland Cement from Mexico, WT/DS60/AB/R (Nov. 2, 1998).
[12] Panel Report, Indonesia – Certain Measures Affecting the Automobile Industry, WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R (July 2, 1998).
[13] Appellate Body Report, European Communities – Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R (Jan. 16, 1998).
Books:
143
ORGANIZATION:TEXT,CASES AND MATERIALS (Cambridge University Press) (2008).
[4] Charnovitz, Steve, Mapping the Law of WTO Accession, in THE WTO:GOVERNANCE, DISPUTE SETTLEMENT AND DEVELOPING COUNTRIES 855 (Janow, Merit E. et al. eds., 2008).
[5] CHING,CHEONG, HANDBOOK ON CHINA’S WTO ACCESSION AND ITS IMPACTS (World Scientific) (2003).
[6] CORTEN, OLIVIER & KLEIN, PIERRE, THE VIENNA CONVENTIONS ON THE LAW OF
TREATIES:ACOMMENTARY (Oxford University Press) (2011).
[7] DAMME, ISABELLE VAN, TREATY INTERPRETATION BY THE WTO APPELLATE BODY
(Oxford University Press) (2009).
[8] DÈORR,OLIVER & SCHMALENBACH,KIRSTEN, VIENNA CONVENTION ON THE LAW OF
TREATIES:ACOMMENTARY (Springer) (2012).
[9] FEICHTNER, ISABEL, THE LAW AND POLITICS OF WTO WAIVERS: STABILITY AND
FLEXIBILITY IN PUBLIC INTERNATIONAL LAW (Cambridge University Press) (2011) [10] GARDINER,RICHARD K., TREATY INTERPRETATION (Oxford University Press) (2008).
[11] LESTER, SIMON ET AL., WORLD TRADE LAW: TEXT, MATERIALS AND COMMENTARY
[17] STATUS OF WTOLEGAL INSTRUMENTS (World Trade Organization) (2012).
[18] VILLIGER,MARK EUGEN, COMMENTARY ON THE 1969 VIENNA CONVENTION ON THE
LAW OF TREATIES (Martinus Nijhoff Publishers) (2009).
[19] WORLD TRADE ORGANIZATION &HUSSAIN,ARIF, AHANDBOOK ON ACCESSION TO THE
144 WTO (Cambridge University Press) (2008).
Journal Articles:
[1] Baroncini, Elisa, The applicability of GATT Article XX to China’s WTO Accession Protocol in the Appellate Body Report of the China-Raw Materials case: suggestions for a different interpretative approach, 1 CHINA-EULAW JOURNAL 1 (2013).
[2] Conconi, Paola & Pauwelyn, Joost, Trading Cultures: Appellate Body Report on China–Audiovisuals (WT/DS363/AB/R, adopted 19 January 2010), 10 WORLD TRADE
REVIEW 95 (2011).
[3] Du, Michael Ming, The Rise of National Regulatory Autonomy in the GATT/WTO Regime, 14 JOURNAL OF INTERNATIONAL ECONOMIC LAW 639 (2011).
[4] Fontanelli, Filippo, Necessity Killed the Gatt - Art XX Gatt and the Misleading Rhetoric about “Weighing and Balancing,” 5 EUROPEAN JOURNAL OF LEGAL STUDIES
36 (2012).
[5] Gess, Karol N., Permanent Sovereignty over Natural Resources: An Analytical Review of the United Nations Declaration and Its Genesis, 13 THE INTERNATIONAL AND
COMPARATIVE LAW QUARTERLY 398 (1964).
[6] Gu, Bin, Applicability of GATT Article XX in China – Raw Materials: A Clash within the WTO Agreement, JOURNAL OF INTERNATIONAL ECONOMIC LAW (2012).
[7] Liu, Hua, Comment on the Invocation of Article XX for Violation of Para.11.3 in China-Raw Materials, 3 BEIJING LAW REVIEW 152 (2012)
[8] Matsushita, Mitsuo, Export Control of Natural Resources: WTO Panel Ruling on the Chinese Export Restrictions of Natural Resources, 3 TRADE,LAW AND DEVELOPMENT
267 (2011).
[9] Pauwelyn, Joost, Squaring Free Trade in Culture with Chinese Censorship: The WTO Appellate Body Report on China - Audiovisuals, 11 MELBOURNE JOURNAL OF
INTERNATIONAL LAW 119 (2010).
[10] Piérola, Fernando, The Availability of a GATT Article XX Defence with Respect to a Non-GATT Claim: Changing the Rules of the Game?, 5 GLOBAL TRADE AND CUSTOMS
JOURNAL 172 (2010).
[11] Qin, Julia Ya, “WTO-plus” obligations and their implications for the World Trade Organization legal system, 37 JOURNAL OF WORLD TRADE 483 (2003).
[12] Qin, Julia Ya, The Challenge of Interpreting “WTO-PLUS” Provisions, 44 JOURNAL OF WORLD TRADE 127 (2010).
[13] Qin, Julia Ya, Pushing the Limits of Global Governance: Trading Rights, Censorship and WTO Jurisprudence--A Commentary on the China-Publications Case, 10 CHINESE
JOURNAL OF INTERNATIONAL LAW 271 (2011).
[14] Qin, Julia Ya, The Predicament of China’s “WTO-Plus” Obligation to Eliminate
145
Export Duties: A Commentary on the China-Raw Materials Case, 11 CHINESE
JOURNAL OF INTERNATIONAL LAW 237 (2012).
[15] Roessler, Frieder, Appellate Body Ruling in China–Publications and Audiovisual Products, 10 WORLD TRADE REVIEW 119 (2011).
[16] Spiegel-Feld, Danielle H. & Switzer, Stephanie, Whither Article XX? Regulatory Autonomy Under Non-GATT Agreements After China-Raw Materials, 38 YALE
JOURNAL OF INTERNATIONAL LAW ONLINE 16 (2012).
[17] Tyagi, Mitali, Flesh on a Legal Fiction: Early Practice in the WTO on Accession Protocols, 15 JOURNAL OF INTERNATIONAL ECONOMIC LAW 391 (2012).
[18] Voon, Tania, China and Cultural Products at the WTO - WTO Appellate Body Report, China - Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (China - Publications and Audiovisual Products), WT/DS363/AB/R (circulated 21 December 2009, adopted 19 January 2010), 37 LEGAL ISSUES OF ECONOMIC INTEGRATION 253–259 (2010).
[19] Vranes, Erich, The Definition of “Norm Conflict” in International Law and Legal Theory, 17 EUROPEAN JOURNAL OF INTERNATIONAL LAW 395 (2006).
[20] Wu, Xiaohui, Case Note: China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (WT/DS363/AB/R), 9 CHINESE JOURNAL OF INTERNATIONAL LAW 415–432 (2010).
[21] Yamaoka, Tokio, Analysis of China’s Accession Commitments in the WTO: New Taxonomy of More and Less Stringent Commitments, and the Struggle for Mitigation by China, 47 JOURNAL OF WORLD TRADE 105 (2013).
[22] Yu, Li, WTO and National Cultural Policy: Rethinking China Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, 45 REVUE JURIDIQUE THEMIS 457 (2011).
Others:
[1] Amicus curiae submission on International Institute for Sustainable Development (IISD), Canadian Environmental Law Association (CELA) and Ecojustice Canada (Ecojustice) to the panel in Canada – Renewable Energy, 13, 10 May 2012.
[2] AU, THOMAS, RECONCILING WTO GENERAL EXCEPTIONS WITH CHINA’S ACCESSION
PROTOCOL (Social Science Research Network) (2013).
[3] CATTANEO,OLIVIER &BRAGA,CARLOS PRIMO,EVERYTHING YOU ALWAYS WANTED TO
KNOW ABOUT WTOACCESSION (BUT WERE AFRAID TO ASK)(WORLD BANK)(2009).
[4] WORLD TRADE ORG.,http://www.wto.org/index.htm (last visited June 26, 2013).
[5] Wu, Chien-Huei, Assistant Research Fellow, Academia Sinica, The Fragmentation of The Multilateral Trading System: The Case of Trading Rules on Export Restrictions, Symposium on International Economic Law: New Issues and Challenges (Dec. 3, 2012).