Author: Kanak Mishra (Guest Post)
The Author is a fourth year law student at Jindal Global Law School, Sonipat. She has a keen interest in International Laws.
The dynamism of today’s Global Order, more so with Covid-19 around, makes the idea of self-regulation of WTO member countries seem somewhat bizarre and threatening to the role of the Dispute Settlement Body (DSB) in itself. In the backdrop of growing Legal Pluralism, this write-up attempts to engage with the relevance of the ‘necessary’ test pertaining to Article XX of General Agreement on Tariffs and Trade (1994).
Article XX of GATT lays down the General Exceptions under which International trade may be restricted justifiably under the chapeau. Subparagraphs a) to j) list down reasons such as protection of human, animal or plant health, protection of public morals, etc. to justify a restriction on international trade. The appropriateness of the disputed measures is tested through the ‘necessary test’ under subparagraphs a), b), and d).
While a so-called detailed analysis of ‘necessary’ came up only in the Korea-Beef[1] dispute, the word in itself was interpreted much before in Thailand – Restrictions on Importation of and Internal Taxes on Cigarettes[2]. In this dispute, it was held that in the presence of reasonable alternatives measures, a complete import prohibition by Thailand was not sustainable under GATT provisions. On a similar note, the Panel in the United States – Restrictions on Imports of Tuna[3] held that the US did not meet the level of necessity as required within the scope of Article XX as it had not exhausted all the reasonably available options. Both these Panel reports failed to conclusively determine what the ‘necessary’ test entails.
It was only in the Korea-Beef that the Appellate Body conclusively laid down that necessary test involves the ‘cost-benefit balancing’ test. For a measure to be necessary- Firstly, the more common and vital the values or the common interests that the measure seeks to protect, the easier it will be to accept such a measure. Secondly, the measure which is likely to have a slight impact on imports will be deemed necessary more easily as compared to a measure capable of gravely impacting the imports. Thirdly, that there is no reasonable alternative option available be it in a less trade-restrictive way or with lesser trade costs than the measure in question.
Donald H. Regan, in his piece titled ‘The meaning of ‘necessary’ in GATT Article XX and GATS Article XIV: the myth of cost-benefit balancing’, engaged in an extensive analysis of the cost-benefit balancing test. He quite aptly debunked the confusion caused by the ‘necessary’ test as interpreted in Korea-Beef. The Appellate Body held that the test is to find out if there exists some alternative measure which entails less trade cost as compared to the measure in question. Regan pointed out an extremely significant blunder in the formulation of this test by the Appellate Body. He noted that while the alternate measure should be preferred because of its lesser trade costs, the Appellate Body failed to take note of many circumstances wherein such alternate measures might have significantly higher administrative or enforcement costs as compared to trade cost. This would completely defeat the purpose of a cost-benefit balancing test as the comparison was between trade costs and administrative/ enforcement costs instead of it being against trade costs and the underlying goal that the measure seeks to achieve. In pretending to do so, the Appellate Body in Korea-Beef dispute ultimately ended up not using the cost-benefit balancing test at all and instead took up the less-restrictive alternative approach test, which merely enforces the classic principle of members getting to choose their ‘own level of protection’. Subsequent disputes such asEC–Asbestos (involving GATT XX(b)), US–Gambling (which corresponds to GATT XX(a)), and the Dominican Republic–Cigarettes (involving GATT XX(d)) took the same route as Korea-Beef in using the own level of protection test in the garb of the cost-benefit balancing test.[4]
This selective engagement with the necessary test by the Panel and the Appellate Body is a testament to the changing International Legal Order. Both the tests, be it the cost-benefit balancing test or the own level of protection test, the concern deep down in World Trade Law is the level of scrutiny to which members are subjected to, upon acting unilaterally. This essentially makes it an issue of International Legal Pluralism (Joel P. Trachtman), which seeks to establish multiple loci of authority in the International Law sphere.[5] Considering the cost-benefit balancing test, which follows a strict-pronged approach to ascertain if a measure is necessary under Article XX of GATT, it could be said that this stands in stark contrast to the own level of protection test which constitutes a lenient way to let the members decide for their own. These two tests then may be forming the foundations of the deeply rooted Pluralism in International law. While the cost-benefit balancing test has Theoretical Pluralism’s underpinnings, the own level of protection test has Methodological Pluralism’s foundations both in scope and authority.
Theoretical Pluralism, as opined by Peter Joachim Katzenstein[6] and Rudra Sil,[7] is based strictly on legal scholarship located within a particular paradigm and is thereby often critiqued to be very pessimistic about the possibilities of diplomacy and international co-operation. Hence, the cost-benefit balancing test falls flat based on this logic.
Methodological Pluralism, on the other hand, as recently opined by Patrick Thaddeus Jackson,[8] is a legal order in International law based on an open-ended paradigm approach that draws theoretical traditions from complex practical problems of the law. The own level of protection test seems to be in line with methodological Pluralism because of how it imbibes rationalist approaches (of Martti Koskenniemi)[9] to International Law. This belief in the unilateral acts of the states to be in coherence with global diplomacy allows for the own level of protection test to be capable of finding the maximal accommodation to alternative measures for claiming the exception under Article XX of GATT.
Thus, the Dispute Settlement Body’s interpretation of ‘necessary’ seems apt in this dynamic global environment, for it allows WTO members to choose their own level of protection in availing the exceptions under Article XX of GATT. This is reflective of the evolving legal order in consonance with methodological Pluralism. The significance of such Pluralism will increase multifold in the post-Covid-19 world, where the Global Legal Order will play out on a wholly revised note.
[1] Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161 and 169/AB/R
(adopted 10 January 2001).
[2] DS10/R, adopted on 7 November 1990, 37S/200.
[3] DS29/R, dated 16 June 1994, paras. 5.28-5.39.
[4] Donald H. Regan, The meaning of ‘necessary’ in GATT Article XX and GATS Article XIV: the myth of cost-benefit balancing, World Trade Review (2007), pp 347-369, <https://pdfs.semanticscholar.org/ebef/36536ebef67f4acd0514e7ab9cceab6d3a09.pdf>
[5] Joel P. Trachtman, The Crisis of International Law, 44 Case W. Res. J. Int’l L. 407 (2011) Available at: <https://scholarlycommons.law.case.edu/jil/vol44/iss1/6>
[6] Peter Joachim Katzenstein FBA is the Walter S. Carpenter, Jr. Professor of International Studies at Cornell University.
[7] Rudra Sil is Professor of Political Science and the SAS Director of the Huntsman Program in International Studies & Business. He holds a Ph.D. from the University of California at Berkeley and has been teaching at Penn since 1996.
[8] Patrick Thaddeus Jackson is Professor of International Studies in the School of International Service, and also Director of the AU Honors program. He previously taught at Columbia University and New York University.
[9] David Roth-Isigkeit, ‘The blinkered discipline?: Martti Koskenniemi and interdisciplinary approaches to international law’, Cambridge University Press 2017
About The Law 