Munich Personal RePEc Archive

How Necessary? A Comparison of Legal and Economic Assessments GATT Dispute Settlements under: Article XX(b), TBT 2.2 and SPS 5.6

Ronen, Eyal and Dawar, Kamala (2016): How Necessary? A Comparison of Legal and Economic Assessments GATT Dispute Settlements under: Article XX(b), TBT 2.2 and SPS 5.6. Published in: Journal of Trade, Law and Development , Vol. 8, No. 1 (October 2016): pp. 1-28.

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Abstract

This paper identifies the legal and economic assessments applied to resolve WTO disputes requiring an assessment of the contribution of the measure to the objective pursued, along with identifying any reasonably available alternatives. It focuses on disputes encompassing an interpretation of GATT Article XX (b), Sanitary and PhytoSanitary Agreement (SPS) Article 5.6 and the Technical Barriers to Trade (TBT) Agreement Article 2.2. This narrow focus is because the WTO DSB has opined that there are no significant differences between the tests developed under Art. XX(b) of the GATT 1994 and Art. 5.6 of the SPS Agreement, nor that any aspect of the Art. XX(b) jurisprudence relating to the interpretation of the term "necessary" would be inapplicable to Art. 2.2 of the TBT Agreement. This provides an opportunity to compare the legal and economic assessments applied in disputes falling under these provisions.

This paper identifies no significant differences between the legal tests relating to the interpretation of the term "necessary". A WTO Panel is under no obligation to quantify the measure's contribution to the objective pursued and 'a risk may be evaluated either in quantitative or qualitative terms'. However, the same cannot be said for the economic assessments determining whether the necessity of the contribution of the contested measure.

After setting out the legal tests, the paper identifies those economic assessments undertaken to resolve disputes involving these three different GATT/WTO provisions. The paper finds that quantitative economic models are rarely employed in WTO dispute cases. The lack of coherent guidelines for assessing the economic dimensions of a dispute in a transparent and robust manner potentially undermines the effectiveness and the reputation of WTO Dispute Settlement Body (DSB) recommendations.

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