Bjorklund m - Is Law but a Dismal Constitution

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Draft & work in progress please do not quote without permission

Is Law but a Dismal Constitution?

Martin Björklund1

“In no country do the decisions of positive law coincide exactly, in every case, with the rules

which the natural sense of justice would dictate. Systems of positive law, therefore, though

they deserve the greatest authority, as the records of the sentiments of mankind in different

ages and nations, yet can never be regarded as accurate systems of the rules of natural

justice.”

Adam Smith, Theory of Moral Sentiment, VII, IV, § 36

“At the first establishment of Judges there are no laws; every one trusts to the natural

feeling of justice he has in his own breast and expects to find in others”

Adam Smith, Lessons on Jurisprudence V, 110-11 KH 153

Abstract

The relationship between the WTO and any dictate emanating from the science of Economics suchas a general call for “free trade” is stuff for apparently unending debates. In academic debate it

nonetheless seems clear that knowledgeable and eminent writer wishes to make a case whereby theunderpinnings of the organisation and its legitimacy are to be found with guidance in the science of

economics. It would also appear as if the AB occasionally would give voice to such an impulse – or

at least that option would have to be considered as a valid alternative to explain language such as

that found in the Korea Beef case on what is necessary and which values need to be protected at the

cost of trade and which do not. What I am trying to have a look at is whether law ‘as a science’ is

only an instrument whereby the safer pastime of trade & commerce, the realm of the science of

economics, is to be safeguarded from our more sordid impulses or whether the opposite might stillbe conceivable – that the language of law would be used not to determine the ultimate goals of

humanity or a single correct path thereto but rather to mediate between different goals of human

activity.

1Senior lecturer in Public Law (Acting), Swedish School of Social Science, University of Helsinki

Research Fellow The Erik Castrén Institute & CoE for Global Governance Research. University of Helsinki

Submission for Panel ‘The Metaphysics of Economics in International Law and Global Governance’ at EuropeanSociety of International Law/American Society of International Law Conference Changing Futures? Science and

International Law, Helsinki 2 October 2009



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Introduction

In a case concerning article GATT article XX(d) exceptions to GATT rules, the WTO Appellate

Body, after it has already solved the case, obiter dictum states the following

Para. 162. “It seems to us that a treaty interpreter assessing a measure claimed to be

necessary to secure compliance of a WTO-consistent law or regulation may, in appropriate

cases, take into account the relative importance of the common interests or values that the

law or regulation to be enforced is intended to protect. The more vital or important those

common interests or values are, the easier it would be to accept as ‘necessary’ a measure

designed as an enforcement instrument.”2

The part of the actual case relating to article XX was solved by the AB on the grounds that the

measures adopted by the Korean authorities in order to secure compliance with consumer-

protection legislation were not necessary because other, less trade restrictive measures, would have

been available.3

Apparently there was not in this case any question as to the relative importance of

the aims pursued by the respondent. The AB nonetheless takes the opportunity to issue a general

statement on how such questions could be handled in the future.

The AB seems to be “doing a Solange - using this opportunity to stake out the borders of its

powers, putting member states on notice that it may sometimes go beyond merely assessing

whether the measures taken are necessary to secure the aims of the scrutinized legislation – it may

also evaluate the relative worth of the aims themselves. The AB is leaving it open according to

what standard it might assess the relative importance of these “common values”. The AB employs

language reminiscent of that used by the EctHR in assessing whether the infringement of a certain

right might be “necessary in a democratic society”. When the EctHR performs this balancing act it

is commonly assumed that it does so with the aim to preserve a particular version of European

democracy – it acts in defence of democracy armed with a common European standard. The

legitimacy of the endeavour is rarely called into question even if it does encroach on the

prerogatives of domestic legislatures. The major difference is that the AB has no “common

European standard” to base its assessment on – at least not yet.

2 Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef (WT/DS161, 169/AB/R) DSR 2001:I, 5 para.

162. Italics by author. The paragraph quoted was preceded by a definition of the word “necessary” Para. 161 “We

consider that a “necessary measure is ... located significantly closer to the pole of 'indispensable' than to the oppositepole of simply 'making a contribution to.”3 Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Bee (WT/DS161, 169/AB/R) DSR 2001:I, 5 para

152-185



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Effective use of the Solange-method would, however, assume that such a standard exists and is

clearly visible so that those warned may take heed. The “Solange-method” as used by i. a. the

German Bundesverfassungsgericht consists of warning another decision-maker (in the original case

the ECJ) about which types of trespasses it might not tolerate but at the same time not testing its

own credibility by challenging the institution warned in that very instance, but merely laying out a

policy for the future in hope that the addressee of the message would accept the line drawn and act

in accordance. The first part of paragraph 162 appears to be putting MS on notice that the AB may

question their actions but it does not give a clear view of what the scale of relative values might

look like or how one would go about construing such an order. Maybe the AB just felt it had to start

with the statement and the standard will be built case by case. 4

Treaty law

What does such a statement mean in terms of the covered agreements’ of the WTO? The WTO AB

in this case envisages a situation where it would attempt to define some particular, WTO consistent

law or regulation as less important than the rights of a foreign trader to sell his goods. This would

not merely be a statement to the effect that the measures taken may not have been necessary to

attain the goal but that the goal itself may not have been so important in the first place. What are the

values to be compared in order to arrive to a scale of relative importance? The statement itself is

made in connection with exception in GATT art XX(d) – to ensure compliance with laws and

regulations including, the prevention of deceptive practices. The phrasing of the list in XX(d)

suggests it to be open-ended as the listed aims are prefaced with the word “including”. The only

limitation to the aims protected by the legislation would seem to be that the legislation is “not

inconsistent with the provisions of this Agreement”

Could one then infer from the agreement itself an internal order of importance between the different

aims listed not only in art XX(d) but perhaps also in the other general exceptions listed in article

XX? There does not seem to be any immediate logical hindrance in extending the reach of the AB

statement. As long as the legislation is not inconsistent with the covered agreements a trade-

restricting measure could be given protection by article XX(d). Would then the protection of

exhaustible resources score higher than efforts to secure effective implementation of consumer

4 For an overview of the margin of appreciation doctrine in international adjudication see Shany, Yuval “Towards ageneral margin of appreciation doctrine in international law?” 16 EJIL 907 Nov 2005 including a brief mention of theWTO at 928 where the author considers the WTO dispute settlement to be able to embrace the doctrine “since itdenotes judicial restraint and acknowledges the normative ambiguity of some WTO norms.”



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safety laws? How does an import ban of the fruits of prison labour score if compared to a ban on the

importation of pornography, pork, Pim’s n.1 or some other offensive good for the protection of

public morals?5 Are there objective criteria for the assessment of what may plausibly be construed

as a defence of public morals – and equally objective criteria with which to situate such an aim in

comparison with the other aims listed in art XX? It does not seem very difficult to come up with a

number of “hard cases” where a universal order to be applied instinctively by all WTO- members

would be fairly difficult to assume. Post-Korea beef case-law gives some clarification – albeit

starting in the “easy end” of value-comparisons.6

“… the objective pursued by the measure is the preservation of human life and health

through the elimination, or reduction, of the well-known, and life-threatening, health risks

posed by asbestos fibres. The value pursued is both vital and important in the highest

degree.”Appellate Body Report on EC — Asbestos, paras. 170–172

“to preserve the reputation of Canadian grain notably in export markets. It is clear that theseinterests, which appear to be essentially commercial in nature, are important. It seems

equally clear, however, that these interests are not as important as, for instance, the

protection of human life and health against a life threatening health risk, an interest which

the Appellate Body in EC — Asbestos characterized as ‘vital and important in the highest

degree.’”

Panel Report on Canada — Wheat Exports and Grain Imports, paras. 6.223–6.224.

As a matter of personal taste one might agree with the statements above but they are arguably also

fairly easy examples. From the point of view of treaty law the question is somewhat different –

where can we find support for the assertion that the covered agreements include a hierarchy of

values? The few examples of more difficult comparisons mentioned above are perhaps not entirely

unimaginable and beg the question – where can the AB draw the authority to make these choices

about relative values?

5See a very animated and insightful description of the problem faced by the Kingdom of Saudi Arabia attempting to

ban among other things the import of pork-products, alcoholic beverages and pornography. In Section III: Islamic Lawand Article XX(A) in Bhala Raj, Modern GATT Law – a treatise on the General Agreement on Tariffs and Trade,London 2005 at 534 et seq.6 The test was also applied in Appellate Body Report, US – Gambling WT/DS285/AB/R, para. 304 et seq. in relation to

GATS stating among other things in para 304 “We note, at the outset, that the standard of "necessity" provided for in the

general exceptions provision is an objective standard”. See also the qualifications of different values to be protected in Brazil

– Retreaded Tyres AB-2007-4 WT/DS332/AB/R Where the AB comments on the Panels work: “It found that risks of

dengue fever and malaria arise from the accumulation of waste tyres and that the objective of protecting human life andhealth against such diseases "is both vital and important in the highest degree".321 The Panel noted that the objective of the Import Ban also relates to the protection of the environment, a value that it considered—correctly, in our view—important.”



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There are other issues where similar concerns as to the mandate of the AB have been raised – both

the SPS and TBT agreements contain wording that the AB has used to make decisions that have

raised criticism for lack of deference to national legislators. Is it for the AB to decide a MS is

inconsistent in its bans on imports of goods that are hazardous to ones health if Asbestos is banned

but cigarettes are not.7

The list of legitimate objectives in Art 2.2 TBT raises similar concerns.

Would the AB consider itself competent to compare the value given to human health with the value

given to safety and national security?8

Which would be more important - a member state measure

designed to protect human life where the risk for fatality is very small – say 1:100 000 000 or the

protection of public morals of great importance to a nation as part of religious belief held by a great

majority of the inhabitants of the member state?9

The drafting history of GATT article XX suggests, at least in the words of prof. Jackson that thetendency of the drafting sessions that came up with the open-ended list “…was to add to the list of

general exceptions in order to meet the particular conditions existing in specific countries”10 This

might be construed to suggest that there was never any intention to place these concerns on a scale

where one concern is compared to the other.

Coupling the relative importance of values to the assessment of the necessity of the measure

The Appellate Body seems to have a twofold method on defining acceptable exceptions first as

arbiter of the relative weight of a value and then coupling this with the assessment of necessity of

the measure. I suggest we take a closer look at the implications of para 162 in Korea Beef for the

exceptions listed in art XX. The first sentence has already been dealt with above but the last

sentence in its apparent common sense introduces a particular automaticity with rather interesting

results. Without the last sentence in para. 162 we might conceive of a situation a) where the AB

considers a certain value to be of lesser importance (tilting the scales in favour of the MFN

expectations of the complainant). In a separate assessment the AB then judges the necessity of the

measure to be close to the maximum value “indispensable to” thus tilting the scales back toward

accepting the exception to MFN and favouring the defendant. The exact calculation will of course

be depending on a further variable which we are lacking - the weight given by the AB to the relative

7Matsushita et. al. at p 531 et seq quoting Horn & Mavroidis.

8The debate on whether the criteria in Article XXI GATT are to be seen as objective or subjective would be part of the

same problem. See further below.9 For the sake of clarity please note that it is not in dispute that the AB has explicitly allowed the national legislatorfreedom to determine the level of risk to health acceptable to that member state – what we are looking at is thesubsequent evaluation made by the AB as to where the value protected is to be placed on a scale of competing values.10 Jackson, John H. World Trade and the Law of GATT §28.1 at 742 (1969) ELABORATE QUOTE



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value of the aim in comparison with the weight given to the necessity-element of the calculation.

Assuming for instance that these are of equal weight they might entirely outweigh each other – or –

given a different grading the combined “weight” might contribute to tilting the scale further toward

allowing the exception. We might also conceive of a diametrically opposite situation b) where the

AB does consider the value of the aim pursued of the utmost importance and subsequently in its

separate assessment of the necessity of the measure safeguarding said value concludes that the

measure stands at the weaker end of that scale – the “contributing to” thus again counteracting the

effect of the relatively important value and balancing the scales back towards MFN-rule. The last

sentence in para 162 of Korea Beef, however, makes such a scenario unlikely.

When the AB states “The more vital or important those common interests or values are, the easier it

would be to accept as “necessary” a measure designed as an enforcement instrument.” It seems tobe offering something to the MS – it seems to be offering a wide “margin of appreciation” for how

national legislators should go about safeguarding the most vital and important values or common

interests. It couples the two “sliding counterweights” so that if the value is considered “heavy” it

will automatically pull with it the nature of the measure towards the “indispensable” end of the

necessity scale. This is a technique of deference used by other courts in questions where issues of

great national interest are at stake (ECJ - Bosphorus-case) if the aim is great and noble enough the

proportionality issue will not be looked into all that closely (the actual contribution made by the

grounding and seizure of a Yugoslavian owned aircraft leased to a Turkish airline to the plight of

the Bosnian population.) Acts of high politics may sometimes have to be of a symbolic nature –

digging to deep into the logic of such political gestures would appear to be in bad taste?

Here two remarks have to be made – first, the AB has in the first part of article 162 reserved itself

the right to be the final arbiter of what would qualify as such values and common interests and

second, what of the opposite situation? What if the aims are not considered all that important? The

AB does not spell it out but an e contrario reading of the last sentence of para 162 does not seem to

be entirely unlikely (see panel in Canada wheat supra). Might one end up with a situation where the

weight attributed to a certain value is deemed so slight that the assessment of necessity of the

measure is automatically pushed below the threshold of “contributing to” and thus makes any

measure in the defence of such an aim virtually impossible. An e contrario reading of the last

sentence would suggest that there might be situations where the standards of necessity cannot be

met – not because the measure cannot be proven to be within the bounds of necessity (perhaps even



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indispensable?) but because the aim is not deemed important enough by the AB at which point the

actual operation of assessing the necessity of the measure is compromised.11

Taken to its logical conclusion the last sentence of para 162 in Korea beef suggest that the AB

through creating a scale of both necessity and relative values and coupling these to each other has

created a mechanism whereby certain values – even if encompassed by the wording of the covered

agreements – in practice cannot be protected by MS measures if tested in front of the AB. And this

occurs in a situation where the complainant in a case concerning breach of the covered agreements

– in line with another decision of the AB12

– does not have to argue for the relative value of its

trade interest . In combination these two elements mean that even a theoretical hindrance to trade

would be removed by the AB regardless of the fact that it strives to protect a value falling under

article XX. The AB could push the necessity element away from what it considers close enough to“indispensable” simply because it was not convinced of the importance of the value the measure

was instituted to protect. What could be the answer of the AB if it had to defend the claim that such

a position seems to raise the value of trade clearly beyond any other values that member states

might care to defend? The possibility that the AB through this mechanism in practice could render

express treaty provisions meaningless might also require some explanation. It would seem to run

counter to DSU article 3:2 as well as generally held notions of public international law.13

From which point of view would para 162 be a matter of fact statement that is just as it should and

raises no eyebrows – except perhaps with some hopelessly lost academic type trying to create

problems where there are none.

The problem of the nation state – prerequisite for a functioning market or transitional and

temporary compromise?

It would seem that the AB has struck upon the same paradox as Smith once did – in order to

organize a functioning market the nation state seems so far to be unsurpassed in its capacity to

11In the game of legitimacy one might even see examples of courts attempting to add to their legitimacy through

expounding on an unshakeable defence of all that is holy, true and good, only to come to the conclusion that such was,

however, unfortunately not the case today before them.– viz CFI in the Kadi & Al Barakaat judgements raising the rightto property to the level of Jus Cogens only to then state that this right is not absolute and that no violation of it took place – coincidentally avoiding having to censure the UN security council.12

AB report EC – Bananas para 132 expounding on the meaning of art. XXIII:1 GATT and art 3.7 DSU13

Interestingly one of the memebrs of the AB cited as presiding member of the section deciding the Korea Beef casewhile writing on the ”Standard of Review in WTO law” Claus-Dieter Ehlermann and Nicolas Lockhart, JIEL

2004.7(491) states ” It is also significant that where the WTO agreements allow Members to pursue other policy goals,such as health and the environment, that result in trade restrictions, the agreements give Members a margin of discretionin making policy choices that panels and the Appellate Body respect.” there is no mention of the Korea Beef case inthat article.



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secure property rights, necessary infrastructure etc. Nonetheless that same actor is also the root of

the evil – for Smith this was among other things the necessity of defence-expenses14 whereas for the

AB it is most acutely the peculiar tendency of states to hinder trade with more and usually less

acceptable excuses. The problem for the AB as it was for Smith is to somehow constrain the state to

only the right kinds of measures – to encourage only the right kind of values and decisions. A very

clear view of the problem is offered by writers who wish to see the AB as a vehicle for the

evolvement of a global constitution.

The “Hobbesian restrictions of international markets, such as centuries –old trade

protectionism, tend to reduce freedom and consumer welfare and often redistribute income

among domestic citizens in an arbitrary manner (i.a. based on administrative fiat and the

political power of ‘rent-seeking interest groups’ rather than on the ‘ethics of the market’

which tends to reflect consumer demand in a more democratic manner, provided markets are

not distorted).15

The question is then how to make sure that the ‘ethics of the market’ flows freely and unhindered

by the Hobbesian restrictions – i.e. states and their petty internal preferences. Is the only way to

centralize the decision-making on what values to uphold to the AB? If we disregard our Hobbesian

reflexes to look at the treaty aspects and merely look at the practical implications. Does such an

operation not require a significant amount of knowledge of local conditions? Do not the members

of the AB risk becoming what has been described as “men of system” with a morally utopian

approach to politics so deplored by Adam Smith?16

If one adheres to ideas presented already by St Augustine on how to combat the dangerous passions

of men by having them devote their time and energies to the lesser evils (for St Augustine the

solution was letting pride take the lead in order to control other more base instincts) and adds to this

the tenets of Montesquieu, Hume and later Smith who define as the “safer” pastime the

accumulation of wealth – one may find that also this occupation becomes totalizing to the point of

submitting all other human activity to that purpose. Smith himself deplored some of the

inconveniences “arising from a commercial spirit .. it confines the views of men … education is

greatly neglected … it sinks the courage of mankind and tends to extinguish the martial spirit.”17

Later political economists have applied the same thought to relations among nations – favouring

trade secures international peace. This has often been referred to as a justification for the

14Foley, Duncan 216 et seq.

15Petersmann, Ernst-Ulrich “From the Hobbesian International law of coexistance to modern integration law : the

WTO dispute settlement system” Journal of international Economic Law 1 (1998) 175-198 at 181.16

Theory of Moral sentiment VI, ii, 2 & 17 as quoted in Haakonsen, knud “The Science of a Legislator – The NaturalJurisprudence of David Hume & Adam Smith” Cambridge 1981 pp. 89-91.17 Smith Adam, Lectures on Jurisprudence ed. Meek et. Al Oxford 1978 at 539-541



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multilateral trading system, ITO, GATT, WTO. After all – anything that strives to hinder the

harmless accumulation of wealth may be part of the more dangerous passions of man – the dark

side that has to be constrained at all cost.

If indeed the combination lined out above holds true where the trade interest is always assumed

whereas restrictions must be heavily scrutinized and successively removed as far as possible – the

AB has constructed the internal logic of WTO dispute settlement very much in the image of how

Smith would have acted. When in doubt, go for the least trade restricting alternative.

Caveat - The example of the EC(J) unfortunately not valid

Why could not para 162 of the Korea Beef just be seen as an attempt by the AB to institute the

same type of proportionality in the WTO dispute settlement that has functioned so well at the ECJ?

The list of exceptions in article 30 EC are not equivalent in worth and that is not seen as a problem

– the ECJ constantly refers to the proportionality of a measure being dependent on the importance

of the exception to be protected. Human life and health is clearly of greater worth than many of the

other listed exceptions.18

The member states of the EC routinely have to establish both the

acceptability of a limitation to trade in relation to one of the exceptions in article 30 EC as well as

the necessity and proportionality of the measure.19 This is well established and sensible – why

should it be made into such a great problem within the framework of the WTO?

In using the EC as an example of how the WTO should develop there is always the risk of

overlooking certain fundamental differences – in this instance, differences of fundamental rights.

The EC case-law on art 30 EC has a clear coupling to fundamental rights and their application by

the EctHR.

18Ojanen, Tuomas EU-oikeuden perusteita II – aineellisen EU-oikeuden aloja ja ulottuvuuksia. Helsinki 2007 at 117

ref. to i.a. Case C-434 /04 Criminal proceedings against Jan-Erik Anders Ahokainen and Mati Leppik at 33 citing hehealth and life of humans rank foremost among the property or interests protected by Article 30 EC. It is for theMember States, in compliance with Community law and, in particular, with the principle of proportionality, to decide

what degree of protection they wish to ensure, and the manner in which that degree can be achieved (Case C320/93

Ortscheit [1994] ECR I5243, paragraph 16; see also, to that effect, Heinonen, paragraph 45).19

Ojanen (supra) citing Rewe-Zentral (Cassis de Dijon) AG C-120/78 and C- C-270/02 Commission of the EuropeanCommunities v Italian Republic at para 22 “According to settled case-law, it is for the competent national authorities toshow that their rules are necessary in order to attain one or more objectives mentioned in Article 30 EC or meet

imperative requirements and, where appropriate, that the marketing of the products in question poses a serious risk topublic health and that those rules are in conformity with the principle of proportionality (Case 227/82 Van Bennekom[1983] ECR 3883, paragraph 40; Case C-358/95 Morellato [1997] ECR I-1431, paragraph 14; Case C-14/02 ATRAL[2003] ECR I-4431, paragraph 67; and Commission v Italy, cited above, paragraph 30).”



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“According to settled case-law, fundamental rights form an integral part of the general

principles of law the observance of which the Court ensures. … The ECHR has special

significance in that respect”20

The AB, however, lacks such a standard and it may find it hard to impose the standard used by the

ECJ on countries that have not signed the ECHR and therefore may not have the exact same notions

as the EU Member states who have all done so. One might sympathize with wishes that there was a

global charter equivalent to the ECHR that all WTO members might agree on but as there is none

the AB is in a fundamentally different situation than its colleagues in the ECJ. There is simply no

obvious common ground for the AB to refer to as it looks for ways to establish the legitimacy of its

decisions on the relative nature of different values. There is only the covered agreements.

But - is not the alternative chaos?

Would not allowing states to unilaterally decide on which values they wished to uphold create

absolute chaos in the WTO-universe? Would this not result in a myriad of loopholes to be used by

unscrupulous protectionist lobbies sponsoring immaculately phrased laws aimed, but in name only,

at the upholding of sacred values and coincidentally foreign competition. Is not the AB just forced

to say what it did in order to keep some kind of order and warn against attempts to overthrow the

duties spelled out in the covered agreements? Is it not the very purpose for which the AB was

created in the first place, surely it cannot shy away from this core of its duties? Does perhaps the

chapeau of article XX itself demand this sort of assertion – that the AB has to have final say in

what aims of legislation are important enough to disturb trade?

I would tentatively suggest that overseeing the ‘how’ of such laws is enough to uphold the system

without having to go into the ‘what’ and that such definitions are best left to the individual member

states. Because the AB lacks the support of a clearly defined set of “common values” any attempt to

decide on the relative worth of a particular value (other than perhaps that of human life) may end up

censuring a national legislator in a way that can result in open defiance and loss of legitimacy for

the AB and consequently the WTO-system. The ECJ can draw on the legitimacy of the practice of

the EctHR and the wealth of case-law laying out the foundation for the types of proportionality

decisions it does – the AB cannot and would have to develop its own path to deal with the difficult

balancing of trade issues with other goals of human activity. It is curious that the presiding member

of the section of the AB responsible for the Korea Beef report would have uttered the following.

20Schmidberger C-112/00 ECR 2003 I -5659 see also Avbelj, Matej Jean Monnet Working Paper 06/04

“ European Court of Justice and the Question of Value Choices Fundamental human rights as an exception to the

freedom of movement of goods”



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“I wonder whether it is plausible that the WTO law is stricter than EC law. Normally one

would expect the rules governing the relations among members of the wider grouping (theWTO) to be more flexible than those that apply within the much smaller club (the EU/EC)

which in addition, pursues more ambitious goals, … I would submit, however that as ageneral rule, one would expect that the law governing the relations of the WTO Members to

be more flexible and less strict than the rules applying within the EU/EC. There must be

particular reasons to arrive at the opposite results. If there are not such reasons, I would be

inclined to doubt that the result is right, and that is is sustainable in the long run”21

One possible answer to the question that puzzles the former AB member could be that the law of

the WTO is stricter precisely because the ECJ in its decisions takes into account more variables

than the AB. The ECJ has, among other things because of the Solange decisions, had to learn to be

sensitive to issues originally outside its focus. Maybe the strict focus on safeguarding trade interests

brings about a stricter application of the covered agreements than is actually needed to uphold them

and indeed sometimes goes beyond what is acceptable to the member states?

So what? Part I - The enforcement issue

In any case before it the AB will be uttering its verdict without actually being able to control the

execution of the ruling – it would still be the member state authorities that would have to implement

such a decision. In case a ruling is perceived to make slight of the concerns of a member statelegislator concerning a value deemed to be worthy of protection it seems that a very strong threat of

retaliation would have to be present from the complainant in order to enforce implementation. To

make use of the countermeasures available through the WTO dispute settlement system has proven

to be rare. Partially because of the economic draw-backs involved for the complainant itself 22 but

also for the bad-will incurred through these measures.23

Complainants may not find a victory

attained through this type of reasoning easy to enforce. If such a case – or indeed several cases of

the same nature - end up seen as the enforcement of a specific set of values by a particular set of states against others the situation is even more difficult.

21 Ehlermann, Claus-Dieter, "Six Years on the Bench of the "World Trade Court" - Some Personal Experiences as

Member of the Appellate Body of the World Trade Organization" 36 Journal of World Trade vol 4 (2002) pp 605-639 at633-63422

Anderson, Kym, “Peculiarities of Retaliation in WTO Dispute Settlement”, Centre for International EconomicStudies, Adelaide University, Discussion Paper no. 0207 March 2002, <www.adelaide.edu.au/CIES/0207.pdf >at 1023

Hudec, Robert E. ”The adequacy of WTO Dispute Settlement Remedies” in Hoekman , Bernard M, English, Philipand Mattoo, Aaditya (eds) Development, Trade, and the WTO World bank 2002 at 81. See also Shaffer Gregory, “How

to Make the WTO Dispute Settlement System Work for Developing Countries: Some proactive Developing CountryStrategies” in Towards A Development-Supportive Dispute Settlement System in the WTO ICTSD Resource Paper no.5.March 2003 pp. 5-66 at 5 et seq..



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So what? Part II – The asymmetry of participation

The ability of WTO MS to use the DSU system to their favour notoriously varies. Many smaller

trading nations or developing countries might have a critical disadvantage compared to industrial

states in the lack of expertise in trade law within the national administration. There are in both

absolute terms and proportionately fewer lawyers trained in international trade law in most other

parts of the world than there are in the EU and especially in the US. There are currently over a

hundred law professors in the US teaching WTO law each year to over two thousand law students.

Even those lawyers from developing countries who learn the trade often end up in private practice

in the US or EU. Such mobility from administration to private practice in the EU or the US also

exists but it does not hurt the capacity of these administrations in the same way. 24 Lack of expertise

may be a handicap at several different stages of the process. The first problem is in identifying andbuilding a case, which requires domestic expertise both at an administrative level as well as in the

affected domestic private enterprises to identify issues in terms of the WTO covered agreements.

The agreements need to be reasonably well known and there has to be personnel capable of

assessing their potential for success in a dispute settlement proceeding. This requires in depth

knowledge of the substance of the agreements and a functioning link between domestic industry

and trade representatives in the administration. In addition it requires a trust in the system – coming

up with a case has to be worth the trouble. An individual company that thinks it is being hurt by

measures that are not WTO-compatible may often think it unwise to complain – the usual reaction

for someone trying to enter new markets or to expand in them is to avoid the stigma of

“troublemaker”.25 Usually a complaint would be made anonymous through the intermediary of an

organisation or association of industry. This organisation could also be the one that hires legal

representation in order to offset the cost to the whole membership. There are of course also

situations where even a problem of significant economic interest is clearly the concern of only one

particular company and where the company decides to take a high profile such as in the Bananas or

24Shaffer at 17 citing the list of American Association of Law Schools in Se e.g. Shaffer Gregory, “How to Make the

WTO Dispute Settlement System Work for Developing Countries: Some proactive Developing Country Strategies” in

Towards A Development-Supportive Dispute Settlement System in the WTO ICTSD Resource Paper no.5. March 2003pp. 5-66 at 11. Referring to the dominant position of US or US trained lawyers at the WTO as commonly referring tothemselves as the “Jackson Mafia” as a reason for a predominantly common law approach to the development of WTOlaw. Also see Bhala Raj, The Precedent Setters. De Facto Stare Decisis in WTO law Adjudication (Part Two of aTrilogy) 9 Journal of Transnational Law & Politics 1 (1999) and by the same author International Trade Law: Theory

and Practice New York, Lexis 2000 2nd

edition at 240.25 In the EU a particular network between national administrations (SOLVIT) has been set up to handle complaints ontrade barriers between EU member states in an anonymous and confidential way. Secrecy and confidentiality are highpriorities in order to encourage companies to file complaints see C (2001) 3901 Final "Commission Recommendationof 7 December 2001 for Using "SOLVIT" - the Internal Market Problem Solving Network"



13

Kodak/Fuji disputes.26

It is already at this stage that trade-law expertise is needed to assess the

validity of the claim and the likelihood of success in order to make a balanced assessment. Most of

the know-how of international trade-law is situated in the the four most powerful trading blocks –

the US, the EU, Canada and Japan with countries such as Brazil taking up the chase.27

Smaller

countries are less likely to generate enough interesting work for trade lawyers compared to the

larger trading nations because they have a narrower scope and limited value of exports. Smaller and

less active traders are therefore less likely to be "repeat players" in WTO-law. It is therefore not

even economically rational for them to make the investment in creating the legal capacity needed to

litigate in the WTO.28

Access to legal expertise abroad always involves extra costs. Because of the

cost of the procedures (anywhere btw ½-2MUSD and upward) states with more modest trade

figures, and thus trade problems of lesser value in comparison to that fixed cost would not use the

system – this does not mean that the trade and possible problems they would have with trade to beof proportionally less relevance for their citizens. If then the voice of the LCD’s for instance is

rarely or never heard in the DSU one might expect that their participation in the creation of the

body of case-law where the hieararchy of values is laid out is minimal. At some point such a

situation is bound to create resentment against the system. Resentment from very numerous

populations against rules made far away.

So how? Objective / subjective national values?

What could be the alternative be? Some lead might be taken from the few rare situations in which

questions of national survival have been discussed – and although I am for reasons stated above

very sceptical of comparing ECJ cases to the WTO dispute settlement we might make use of a

particular example where the same lack of common ground between member states of both the

WTO and the EC might be assumed. Attorney General Francis Jacobs gave an example of how one

might handle questions of extreme sensitivity, those of national security, in the ECJ framework in t

26Famous cases that have been identified with particular companies include Kodak / Fuji for the US v. Japan dispute on

film and and Chiquita for the US complaint about the EU Bananas regime. See i.a. Shaffer, Gregory, “How to Make theWTO Dispute Settlement System Work for Developing Countries: Some proactive Developing Country Strategies” in

Towards A Development-Supportive Dispute Settlement System in the WTO, ICTSD Geneva, Resource Paper no.5(March 2003) 5-66, <www.ictsd.org/pubs/ictsd_series/resource_papers/DSU_2003.pdf >at 20 noting that the factualdescription of the EC's Banana regime in the panel report was taken from the US brief that had been prepared bylawyers hired by Chiquita.27

A listing of trade-law firms in http://www.worldtradelaw.net/lawfirms.htm gave 139 firms of which 12 had offices innon ’Quad’ countries, 80 had offices in Washington DC, 24 in Canada, 14 in Brussels and 6 in London. The best score

for developing countries was Beijing (4) and Brasil (3) the other developing countries were Inodnesia (2), India (1) andColombia (1). The listing is obviousely in no way exhaustive but the web-site is well used by trade-lawyers so it doesgive an idea of the situation.28 Shaffer, supra at 15 and 18.



14

a case where measures amounting to economic sanctions instigated by Greece against the FYROM

were challenged by the commission.29 AG Jacobs stated as follows.

“That issues of national security are primarily a matter for the appraisal of the authorities of the State concerned .. “By reason of their direct and continuous contact with the pressing

needs of the moment, the national authorities are in principle in a better position than the

international judge to decide both on the presence of such an emergency and on the nature

and scope of derogations necessary to avert it.”

AG Jacobs went on to state that the fears of Greece might be entirely unfounded but that it was not

for a judge far removed from the situation to decide on these matters but for the national authorities

themselves. The approach of AG Jacobs amounts to saying that in certain instances a MS may seem

completely unreasonable but it is not for the court to assess the reasonableness of this reaction – ithas to be accepted – but only to assess whether indeed the reaction is genuine, the fear of national

security is truly perceived and the measures taken emanate from this feeling and not from an

attempt to disguised protectionism.

“It is not for the Court of Justice to criticize the appropriateness of the Member State's

response, and to say that the chosen course of action is unlikely to achieve the desired aim

or that the Member State would have a better prospect of successfully defending its interests

by other means. Once again there are no judicial criteria by which such matters may be

measured.”30

The sole limit placed on the autonomy of the Member States is that they may not make

improper use of their powers. Clearly a Member State would be using its powers improperly

if its real purpose in imposing an embargo on trade with a third State was not to prosecute

any political dispute with the third State but to protect its own economy or the interests of

domestic traders.31

This means that the AB would not actually assess the importance to be described to the aims as

such but attempt to assess which importance the administration of the MS itself has given to the

aims. And maybe that was what the AB meant with “in appropriate cases”?

29Opinion of Advocate General Jacobs delivered on 6 April 1995 (1) Case C-120/94 Commission v Greece

Case C-83/94. See also Leifer et al. v Germany ECR 1995 I-03231 “ If there is a threat to public security, which is a matter for the national court to consider , an obligation on the applicant to prove that the goods will be used

exclusively for civil purposes or a refusal to issue a licence if the goods can objectively be used for military purposescan be consistent with the principle of proportionality. 30

Ibid at para 6531 Ibid at para 67



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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 shallbe construed to prevent the adoption or enforcement by any contracting party of measures:

(a) necessary to protect public morals;

(b) necessary to protect human, animal or plant life or health;

(c) relating to the importations or exportations of gold or silver;

(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;

(e) relating to the products of prison labour;

( f ) imposed for the protection of national treasures of artistic, historic or

archaeological value;

(g) relating to the conservation of exhaustible natural resources if such measures

are made effective in conjunction with restrictions on domestic production or

consumption;

(h) undertaken in pursuance of obligations under any intergovernmentalcommodity agreement which conforms to criteria submitted to the CONTRACTING

PARTIES and not disapproved by them or which is itself so submitted and not sodisapproved;*

(i) involving restrictions on exports of domestic materials necessary to ensure

essential quantities of such materials to a domestic processing industry during

periods when the domestic price of such materials is held below the world price as

part of a governmental stabilization plan;Provided

that such restrictions shall notoperate to increase the exports of or the protection afforded to such domestic

industry, and shall not depart from the provisions of this Agreement relating to non-

discrimination;

( j) essential to the acquisition or distribution of products in general or local short

supply; Provided that any such measures shall be consistent with the principle that

all contracting parties are entitled to an equitable share of the international supply of

such products, and that any such measures, which are inconsistent with the other

provisions of the Agreement shall be discontinued as soon as the conditions giving

rise to them have ceased to exist. The CONTRACTING PARTIES shall review the

need for this sub-paragraph not later than 30 June 1960.

Bjorklund m - Is Law but a Dismal Constitution

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