Article XX: General Exceptions

Chapter 13
Article XX: General Exceptions
Section 13.1: Introduction
Ideas:
- exceptions on health (Article XX(b)), enforcement (Article XX(d))
and conservation measures (Article XX(g)).
- Trade and environment : one of the most controversial subjects
in recent years
- Structure of Article XX: (i) an introductory clause (the chapeau)
and a list of types of measures that fall within its scope (from a)
to j))
- Order of analysis: (i) whether the measures falls under Article XX,
the specific provision (e.g. health: XX(b)); if the measure is
provisionally justified, then (ii) whether the measures complies
with the requirements of the chapeau

Section 13.2 Article XX(b) Health measures

(b) necessary to protect human, animal or plant life or health;
Related WTO agreements:
- Agreement on Sanitary and Phytosanitary measures (SPS)
- Agreement on Technical Barriers to Trade (TBT)
EC Asbestos
- Measureatissue:France'sbanonasbestos(DecreeNo.961133).
- Productsatissue:Importedasbestos(andproductscontainingasbestos)vs.certain
domesticsubstitutessuchasPVA,celluloseandglass("PCG")fibres(and
productscontainingsuchsubstitutes).
Keyfindings:
- GATTArt.III:4(nationaltreatment):HavingfoundinsufficientthePanel's
likenessanalysisbetweenasbestosandPCGfibresandbetweencementbased
productscontainingasbestosandthosecontainingPCGfibres,theAppellate
BodyreversedthePanel'sfindingsthattheproductsatissuewerelikeandthatthe
measurewasinconsistentwithArt.III:4.
- TheAppellateBodyemphasizedacompetitiverelationshipbetweenproductsas
animportantfactorindetermininglikenessinthecontextofArt.III:4(c.f.
separateconcurringopinionbyoneAppellateBodyMember.Then,having
completedthelikeproductanalysis,theAppellateBodyconcludedthatCanada
hadfailedtodemonstratethelikenessbetweeneithersetofproducts,and,thus,to
provethatthemeasurewasinconsistentwithArt.III:4.
- GATTArt.XX(b)(exceptions):HavingagreedwiththePanelthatthemeasure
"protectshumanlifeorhealth"andthat"noreasonablyavailablealternative
measure"existed,theAppellateBodyupheldthePanel'sfindingthatthebanwas

Page 1 of 6

Article XX: General Exceptions

justifiedasanexceptionunderArt.XX(b).ThePanelalsofoundthatthemeasure
satisfiedtheconditionsoftheArt.XXchapeau,asthemeasureneitherledto
arbitraryorunjustifiablediscrimination,norconstitutedadisguisedrestrictionon
internationaltrade.
- Selectedissues:
OnappealCanadaputforward4arguments:
1. Panelerredinfindingthatchrysotilecementproductsposearisktohumanhealth
AB:thePanelhadmorethansufficientbasistoconcludethatchrysotilecement
productsdoposeasignificantrisktihumanlifeorhealth
2. Panelhadtheobligationtoquantifyitselftheriskassociatedwithchrysotile
cementproducts
AB:ThereisnorequirementunderArticleXX(b)toquantifytherisktohuman
lifeorhealth
3. PanelerredinfindingthatthelevelofprotectionofhealthinherentintheDecree
isahalttothespreadofasbestosrelatedhealthrisks
AB:WTOMembershavetherighttodeterminethelevelofprotectionofhealth
thattheyconsiderappropriateinagivensituation.Itseemsperfectlylegitimate
foraMembertoseektohaltthespreadofahighlyriskyproductwhileallowing
theuseofalessriskyproductinitsplace.
4. Panelerredinfindingthatcontrolleduseisnotareasonablealternative
AB:Indeterminingwhetherameasureisreasonablyavailable,severalfactors
mustbetakenintoaccount,besidesthedifficultyofimplementation.InThailand
CigarettesthePaneldecidedthatameasurecouldbeconsiderednecessaryin
termsofArticleXX(b)onlyiftherewerenoalternativemeasureswhichThailand
couldreasonablyexpectedtoemploytoachieveitshealthpolicyobjectives.Korea
BeefconfirmedthePanelsfindinginUSSection337oftheTariffActof
1930:ameasureisnotnecessaryintermsofArticleXX(d)ifanalternative
measurewhichitcouldbereasonablybeexpectedtoemployandwhichisnot
inconsistentwithotherGATTprovisionsisavailabletoit.
KoreaBeef:oneaspectoftheweighingandbalancingprocessindetermining
whetherameasureisreasonablyavailableistheextenttowhichthealternative
measurecontributestotherealizationoftheendpursued.Thevaluepursuedin
thepresentcase:vitalandimportant.
Canada:controlleduseisareasonablyavailablemeasurethatwouldservethe
sameend.AB:disagrees,ascontrolleduse:wouldnotallowFrancetoachieve
itschosenlevelofhealthprotectionbyhaltingthespreadofasbestosrelated
healthrisks.

Section 13.3 Article XX(d) Enforcement measures

Page 2 of 6

Article XX: General Exceptions

(d) necessary to secure compliance with laws or regulations which are not inconsistent
with the provisions of this Agreement, including those relating to customs enforcement,
the enforcement of monopolies operated under paragraph 4 of Article II and Article
XVII, the protection of patents, trade marks and copyrights, and the prevention of
deceptive practices;
KoreaBeef
- Measureatissue:(i)Korea'smeasuresaffectingtheimportation,distributionand
saleofbeef,(ii)Korea's"dualretailsystem"forsaleofdomesticimportedbeef),
and(iii)Korea'sagriculturaldomesticsupportprogrammes.
- Productsatissue:BeefimportsfromAustraliaandtheUnitedStates.
GATTArt.III:4(dualretailsystem):TheAppellateBodyagreedwiththePanel's
ultimateconclusionthatKorea'sdualretailsystem(requiringimportedbeeftobesoldin
separatestores)accorded"lessfavourable"treatmenttoimportedbeefthantolike
domesticbeef.
AccordingtotheAppellateBody,thedualretailsystemvirtuallycutoffimportedbeef
fromaccesstothe"normal"distributionoutletsforbeef,whichmodifiedtheconditions
ofcompetitionforimportedbeef.Inthisconnection,theAppellateBodysaidthat
formallydifferenttreatmentofimportedanddomesticproductsisnotnecessarily"less
favourable"forimportswithinthemeaningofArt.III:4.
(GATTArt.XX)Further,theAppellateBodyupheldthePanel'sfindingthatthedual
retailsystemwasnotjustifiedasameasurenecessarytosecurecompliancewithKorea's
UnfairCompetitionActbecausethedualretailsystemwasnot"necessary"withinthe
meaningofArt.XX(d).
"Necessary"requirestheweighingandbalancingofregulationsoffactorssuchas:
- thecontributionmadebythemeasuretotheenforcementofthelaworregulation
atissue,
- therelativeimportanceofthecommoninterestsorvaluesprotectedand
- theimpactofthelawontrade.
TheAppellateBodyagreedwiththePanelthatKoreafailedtodemonstratethatitcould
notachieveitsdesiredlevelofenforcementusingalternativemeasures.
Selected issues:
- for a measure to be justified provisionally under article XX(d), 2
elements:
o measure must secure compliance with laws and
regulations that are not themselves inconsistent with some
provision of GATT 1994
o measure must be necessary to secure such compliance
- burden of proof: on the WTO member which invokes the
exception article XX(d)

Page 3 of 6

Article XX: General Exceptions

Panel found that (i) the dual retail system was put in place in
order to secure compliance with the Korean legislation against
deceptive practices; (ii) the measure was not necessary.
Necessary: the more vital or important are the values that the
law/regulation is designed to enforce, the easier it would be to
accept as necessary a measure designed as an enforcement
instrument.
Aspects to be considerated in evaluating a measure as being
necessary:
o The extent to which the measure contributes to the
realization of the end pursued
o The importance of the values/interests protected by the
respective law/regulation
o The restrictive effects on international commerce
Panel in US Section 337: a measure is not necessary if an
alternative measure that a country could be reasonably expected
to employ and which is not inconsistent with the GATT is
available
AB enforces the Panels finding: it appears that there are
alternative measures (e.g. normal policy under the Korean Unfair
Competition Act)
Through its dual retail system, Korea has shifted all of the
enforcement costs to imported goods and retailers of imported
goods, instead of evently distributing such costs between the
domestic and imported products

Section 13.4 Article XX(g) Conservation Measures

(g) relating to the conservation of exhaustible natural resources if such
measures are made effective in conjunction with restrictions on
domestic production or consumption;
US Gasoline
- Measure at issue: The "Gasoline Rule" under the US Clean Air Act that set out the
rules for establishing baseline figures for gasoline sold on the US market (different
methods for domestic and imported gasoline), with the purpose of regulating the
composition and emission effects of gasoline to prevent air pollution. The Gasoline
Rule provided that only so-called reformulated gasoline could be sold in certain large
metropolitan areas that had experienced significant summertime ozone pollution in
the past. Conventional gasoline could be sold only outside these areas.
- Product at issue: Imported gasoline and domestic gasoline.

GATT Art. III:4 (national treatment): The Panel found that the measure treated imported
gasoline "less favorably" than domestic gasoline in violation of Art. III:4. Imported
gasoline effectively experienced less favorable sales conditions than those afforded to
domestic gasoline:
Page 4 of 6

Article XX: General Exceptions

under the regulation, imported gasoline had to adapt to an average standard, i.e.
"statutory baseline", that had no connection to the particular gasoline imported,
while
domestic gasoline had only to meet a standard linked to their own product in
1990, i.e. individual refinery baseline.
Idea: the vast majority of domestic gasoline did not meet the statutory baseline
GATT Art. XX(g) (exceptions clause): In respect of the US defense under Art. XX(g), the
Appellate Body modified the Panel's reasoning and found that the measure was "related
to" (i.e. "primarily aimed at") the "conservation of exhaustible natural resources," and
thus fell within the scope of Art. XX(g). However, the measure was still not justified by
Art. XX because the discriminatory aspect of the measure constituted "unjustifiable
discrimination" and a "disguised restriction on international trade" under the chapeau of
Art. XX.
Section 13.5 The chapeau to Article XX
Article XX General Exceptions
Subject to the requirement that 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, nothing in this Agreement
shall be construed to prevent the adoption or enforcement by any
contracting party of measures:

US Shrimp
Measureatissue:USimportprohibitionofshrimpandshrimpproductsfromnon
certifiedcountries(i.e.countriesthathadnotusedacertainnetincatchingshrimp).
Productsatissue:Shrimpandshrimpproductsfromthecomplainantcountries.
GATTArt.XI(quantitativerestrictions):ThePanelfoundthattheUSprohibition,based
onSection609,onimportedshrimpandshrimpproductsviolatedGATTArt.XI.The
UnitedStatesapparentlyconcededthisviolationofArt.XIbecauseitdidnotputforward
anydefendingargumentsinthisregard.
GATTArt.XX(exceptions):TheAppellateBodyheldthatalthoughtheUSimportban
wasrelatedtotheconservationofexhaustiblenaturalresourcesand,thus,coveredbyArt.
XX(g)exception,itcouldnotbejustifiedunderArt.XXbecausethebanconstituted
"arbitraryandunjustifiable"discriminationunderthechapeauofArt.XX.
Inreachingthisconclusion,theAppellateBodyreasoned,interalia,thatinitsapplication
themeasurewas"unjustifiably"discriminatorybecauseofitsintendedandactual
coerciveeffectonthespecificpolicydecisionsmadebyforeigngovernmentsthatwere
MembersoftheWTO,alsothemeasureconstituted"arbitrary"discriminationbecauseof
therigidityandinflexibilityinitsapplication,andthelackoftransparencyandprocedural
fairnessintheadministrationoftraderegulations.
WhileultimatelyreachingthesamefindingonArt.XXasthePanel,theAppellateBody,
however,reversedthePanel'slegalinterpretationofArt.XXwithrespecttotheproper
sequenceofstepsinanalysingArt.XX.Thepropersequenceofstepsistofirstassess

Page 5 of 6

Article XX: General Exceptions

whetherameasurecanbeprovisionallyjustifiedasoneofthecategoriesunder
paragraphs(a)(j),and,then,tofurtherappraisethesamemeasureundertheArt.XX
chapeau.

Page 6 of 6