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.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Dispute Settlement, SPS, Technical Barriers to Trade, WTO
• Subjects: F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F1 - Trade > F18 - Trade and Environment; F - International Economics > F5 - International Relations, National Security, and International Political Economy > F53 - International Agreements and Observance ; International Organizations; K - Law and Economics > K3 - Other Substantive Areas of Law > K33 - International Law; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q17 - Agriculture in International Trade

References

Andriamananjara, S., Dean, J. M., & Feinberg, R. (2004). The Effects of Non-Tariff Measures on Prices, Trade, and Welfare: CGE Implementation of Policy-Based Price Comparisons. US International Trade Commission, Of ce of Economics Working Paper, No. 2004-04.A.

Bao, X., & Qiu, L. D. (2010). Do Technical Barriers to Trade Promote or Restrict Trade? Evidence from China. Asia-Paci c Journal of Accounting & Economics, 17(3), 253–278.

Bown, C. P. (2004). On the Economic Success of GATT/WTO Dispute Settlement. Review of Economics and Statistics, 86(3), 811–823.

Bown, C. P. (2008). The WTO Secretariat and the Role of Economics in DSU Panels and Arbitrations. In Chad C. P. and Pauwelyn J. (eds.), The Law, Economics and Politics of Retaliation in WTO Dispute Settlement, Cambridge, UK: Cambridge University Press, 2010, 391-433 (ch.19).

Bown, C. P., & Trachtman, J. P. (2009). Brazil–Measures Affecting Imports of Retreaded Tyres: A Balancing Act. World Trade Review, 8(01), 85–135.

CA Thomas, (2011). Of Facts and Phantoms: Economics, Epistemic Legitimacy, and WTO Dispute Settlement. Journal of International Economic Law, Oxford University Press, vol. 14(2), 295-328.

Calvin, L. & Krissoff B. (1998) “Technical Barrier to Trade: A Case Study of Phytosanitary Barriers and U.S.-Japanese Apple Trade,” Journal of Agricultural and Resource Economics 23(2), 351—366.

Calvin, L., Krissoff B., & Foster W. (2007), Measuring the Costs and Trade Effects of Phytosanitary Protocols: A U.S.-Japanese Apple Example, Review of Agricultural Economics 30(1),120—135.

Charlier, C., & Guillou, S. (2014). Distortion effects of export quota policy: an analysis of the China-Raw Materials dispute. China Economic Review, 31, 320–338.

Ciuriak, D. (2003). The Quanti cation and Impact of Non-Tariff Measures: Why Do NTMs Proliferate and what are the Consequences?, SSRN Electronic Journal.

Disdier, A. C., Fontagné, L., & Mimouni, M. (2008). The Impact of Regulations on Agricultural Trade: Evidence from the SPS and TBT Agreements. American Journal of Agricultural Economics, 90(2), 336–350.

Ferrantino, M. (2006), Quantifying the Trade and Economic Effects of Non-Tariff Measures, OECD Trade Policy Papers, No. 28, OECD Publishing.

Fontagné L., Mimouni M. & Pasteels J.M. (2005). Estimating the Impact of Environmental SPS and TBT on International Trade. Integration & Trade Journal, 7-37.

Fontanelli, F. (2012), Necessity Killed the GATT - Art XX Gatt and the Misleading Rhetoric about ‘Weighing and Balancing’. European Journal of Legal Studies, Volume 5, Issue 2 (Autumn/Winter 2012/13), 36-56.

Ghodsi M. Mahdi & Michałek, J. Jan (2014). Technical Barriers to Trade Noti cations and Dispute Settlement of the WTO, Working Papers 2014-22, Faculty of Economic Sciences, University of Warsaw.

Honda, K. (2012). Tariff equivalent of Japanese sanitary and phytosanitary: Econometric estimation of protocol for US-Japanese apple trade. Economics Bulletin. AccessEcon, vol. 32(2), 1226-1237.

Kee, H. L., Nicita A. & Olarreaga M. (2009). Estimating trade restrictiveness indices, Economic Journal, 2009, vol. 119, 172--199.

Otsuki, T., Wilson, J., & Maskus, K. E. (1999). Quantifying the Impact of Technical Barriers to Trade: A Framework for Analysis. Policy Research Working Papers. The World Bank.

Marceau, G. & Trachtman, J. P. (2009), Responding to National Concerns, in Bethlehem, D., McRae, D., Neufeld, R., Van Damme, I. (eds.), The Oxford Handbook of International Trade Law, Oxford, Oxford University Press.

Mavroidis, P. C., & SAGGI, K. (2014). What is not so Cool about US-COOL Regulations? A critical analysis of the Appellate Body's ruling on US-COOL. World Trade Review, 13(02), 299–320.

Nicita A. & J. Gourdon (2012), “A Preliminary Analysis on Newly Collected Data on Non-Tariff Measures”, UNCTAD Policy Issues in Int. Trade and Commodities.

Nimenya N., de Frahan B, H., & Ndimira P. F. (2014). Quantifying non-tariff measures in international agricultural trade: a tariff equivalent of technical barriers to trade on African horticultural exports to the European markets.

Pouliot, S., & Sumner, D. A. (2012). Differential Impacts of Country of Origin Labeling: COOL Econometric Evidence from Cattle Markets. Working Papers 148593, Structure and Performance of Agriculture and Agri-products Industry.

Regan, D. H. (2007). The meaning of “necessary” in GATT Article XX and GATS Article XIV: the myth of cost–bene t balancing. World Trade Review, 6(3), 347–369.

Romano, E. & Thornsbury, S. (2007). Economic Evaluation of SPS Regulations: Where Can Progress be Made?, Staff Papers 36946, Michigan State University, Department of Agricultural, Food, and Resource Economics.

Twine, E. & J. Rude. (2012). Effects of Market and Policy Shocks on the Canadian and U.S. Cattle and Beef Industries. Paper presented at the Agricultural and Applied Economics Association’s 2012 AAEA Annual Meeting, Seattle, August 12 – 14.

Voon, T. (2014). Exploring the Meaning of Trade-Restrictiveness in the WTO. World Trade Review.

Yue, C., & Beghin, J. C. (2009). Tariff Equivalent and Forgone Trade Effects of Prohibitive Technical Barriers to Trade. American Journal of Agricultural Economics, 91(4), 930–941.