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Whither Article XX? Regulatory Autonomy Under Non-GATT Agreements After China—Raw Materials

Written by  Danielle Spiegel Feld & Stephanie Switzer

On January 30, 2012 the Appellate Body to the World Trade Organization (WTO) released a decision in China—Measures Relating to the Exportation of Various Raw Materials (Raw Materials) in which it condemned China’s refusal to freely export certain raw materials mined within its territory. Apart from the significant political implications of the decision, the Raw Materials report went a good distance towards answering a persistent question in trade law circles: when, if at all, can the savings clause contained in Article XX of the General Agreement on Tariffs and Trade (GATT)  be invoked to justify a violation of another WTO agreement?  Answering the question is important because if GATT Article XX is generally available as a defense against non-GATT violations, it would ensure that the specialized WTO agreements are as tolerant of public policy motivated trade restrictions as is the GATT. That, in turn, would assuage concerns that certain specialized agreements such as the Technical Barriers to Trade Agreement (TBT)  or the Agreement on Subsidies and Countervailing Measures (SCM),  which lack their own savings clauses, are insufficiently sensitive to non-trade concerns, such as environmental protection.  Stated otherwise, permitting broad recourse to Article XX outside of the GATT would soften the perceived rigidity of the specialized agreements, thereby preventing the WTO from inappropriately encroaching upon members’ domestic regulatory space.

This Essay attempts to throw light on the Appellate Body’s Raw Materials report and, more specifically, the impact that it will have on attempts to invoke Article XX outside the GATT in the future. The analysis proceeds in five parts. Part II presents context necessary to understand the normative arguments advanced in favor of applying Article XX to non-GATT agreements. In Part III we trace the origins of the controversy about the scope of Article XX and then, in Part IV, review the muddled state of the jurisprudence on this question prior to Raw Materials. Next, in Part V, we set out the crux of our argument; we argue that the most plausible reading of the Appellate Body’s Raw Materials report is that it created a presumption that Article XX cannot be invoked outside the GATT unless the breached provision specifically incorporates a reference to Article XX or wording of similar import.

We are cognizant that our reading of the Raw Materials report may be unpopular with those who wish to see Article XX applied more broadly. Therefore, in Part VI, we respond to counterarguments that might be raised in favor of an alternative interpretation. We further explain why, in our view, the Appellate Body was correct in refusing to permit the broad cross-application of Article XX to other of the WTO covered agreements. We contend that permitting the generalized application of Article XX outside of the GATT would do needless violence to the delicate balance between trade facilitation and regulatory autonomy to which WTO members agreed.

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