ISSUES-中国法学前沿.pdf

FRONTIERS OF LAW IN CHINA VOL. 14 MARCH 2019 NO. 1 DOI 10.3868/s050-008-019-0005-8 ARTICLE THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION: ANALYSIS OF THE APPLICATION OF ARTICLE XX(A) OF THE GATT GUANGLIN Qiaozi* Abstract With the development of the international community, public morals have attracted increasing attention from states. Nevertheless, the “public morals” exception clause in Article XX(a) of the General Agreement on Tariffs and Trade (GATT) is hardly invoked by state parties as a distinct basis for trade-restrictive measures. The EC-Seal Product dispute is the first case in which the Dispute Settlement Body (DSB) of the World Trade Organization (WTO) considered this issue, after which it addressed the issue in the Columbia-Textiles and the Brazil-Taxation disputes. This article aims to analyze the kinds of public morals that can be justified while implementing trade-restrictive measures. It proposes that the human rights standard is a significant moral concern and that human rights law and trade law may be integrated. The article also addresses the question on the procedures that should be followed in applying Article XX(a) to avoid abuse. It concludes that Article XX(a) attaches intrinsic importance to striking a balance between trade liberalization and state sovereignty, for which it must be reserved in the GATT. Keywords GATT, Article XX, public morals, trade-restrictive measures, human rights INTRODUCTION ...................................................................................................................... 87 I. OVERVIEW OF ARTICLE XX OF THE GATT ................................................................ 89 A. Chapeau of Article XX......................................................................................... 90 B. Article XX(b): Protection of Life or Health of Human, Animal or Plant............. 92 C. Article XX(d): Necessary to Secure Compliance with Laws ............................... 93 D. Article XX(g): Conservation of Exhaustible Nature Resources .......................... 94 II. APPLICATION OF ARTICLE XX(A) OF THE GATT ..................................................... 95 A. Definition of “Public Morals” ............................................................................ 95 B. Two-Tier Test Establishing Justification under Article XX(a) ............................. 96 * (广林乔子) LL.M. in Public International Law, Grotius Centre for International Legal Studies of Leiden Law School, Leiden University, Leiden, the Netherlands; Legal Consultant, Nixon Peabody LLP, Beijing 100025, China. Contact: qguanglin@outlook.com The statement and views expressed in this article are my own and do not reflect those of Nixon Peabody LLP. This article is based on my research toward my LL.M. thesis. I would like to thank Professor Eric De Brabandere for his insightful comments and useful editorial suggestions during his supervision of my thesis. 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 87 1. The Measure Must Be “Designed” to Protect Public Morals .......................... 96 2. The Measure Must Be Necessary to Protect Such Public Morals.................... 97 III. A FURTHER DISCUSSION OF “PUBLIC MORALS” EXCEPTION .................................. 98 A. Historical Development of “Public Morals” Exception Clause ......................... 98 1. “Public Morals” as an Exception in Pre-GATT Era ........................................ 98 2. “Public Morals” in Contemporary Society ...................................................... 99 B. Arguments in Favor of “Public Morals” as an Exception Clause Justifying Trade-Restrictive Measures .............................................................................. 103 1. National Sovereignty ..................................................................................... 103 2. Intrinsic Importance of “Public Morals”........................................................ 104 C. Types of “Public Morals” and Questions of Its Extraterritorial Application ... 104 D. The Difference between “Public Morals” Exception and Other Exceptions .... 106 E. Necessary Evidence to Support Invoking Article XX(a) .................................... 107 1. The Text of the Regulations Concerned and the Relevant Legislative History .......................................................................................................... 107 2. Form of the Measures .................................................................................... 108 3. Opinion Polls and Public Surveys ................................................................. 108 4. Scientific Evidence ........................................................................................ 109 5. Religious or Moral Origins of the Measures Concerned ............................... 109 F. Integrating Human Rights Law with Trade Law ................................................ 110 1. The Definition of “Public Morals” in Human Rights Law ............................ 110 2. The Doctrine of the Margin of Appreciation ................................................. 111 CONCLUSION........................................................................................................................ 113 INTRODUCTION With the progress of free trade, people have begun to attach increasing importance to the moral and ethical problems related to economic development. Can animal welfare be an exceptional clause to restrictions on free trade? Can a local moral standard such as a religion or social belief prevail over the Most Favored Nation obligation and the National Treatment obligations under the World Trade Organization (WTO) regime? Article XX of the General Agreement on Tariffs and Trade (GATT) stipulates a series of exceptions that can justify the acts of contracting parties that are inconsistent with the GATT. Among these exceptions, Article XX(a), namely the “public morals” exception clause, has hardly been invoked. Although there were plenty of cases concerning Articles XX(b), XX(d), and XX(g) of the GATT, there had never been a case before the WTO Dispute Settlement Body (DSB) involving Article XX(a) of the GATT as a distinct basis to justify trade-restrictive measures, before the EC-Seal Products dispute.1 1 Robert Howse & Joanna Langille, Permitting Pluralism: The Seal Products Dispute and Why the WTO Should Accept Trade Restrictions Justified by Noninstrumental Moral Values, 37 Yale Journal of International Law, 368 (2012). 88 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 In 2009 and 2010, the European Union (EU) enacted Regulation No. 1007/20092 and Regulation No. 737/2010. 3 Considering that seals are sentient beings and do also experience painful suffering,4 the EU prohibited the placing of seal products on the market by enacting the EU Seal Regime to protect seal welfare, unless the products satisfied certain conditions.5 The first condition was that the seal products concerned had to be obtained from seals hunted by the Inuit or indigenous people (IC Exception).6 The second condition was that the products had to be obtained from seals that were hunted for marine resource management (MRM Exception). 7 The last condition was that the products had to be exclusively for the personal use of travelers or their families (Travelers Exception).8 However, this Regime provoked objections from Canada and Norway. Canada claimed that the EU Seal Regime promoted animal welfare by establishing conditional market access.9 Meanwhile, the Regime did not provide any information to consumers on the origins of the legally-sold seal products.10 The complainants argued that the EU Seal Regime had violated the Most Favored Nation 11 and the National Treatment obligations,12 and nullified the benefits accruing to them under the GATT.13 However, the EU insisted that the Regime was rooted in the widespread concern for animal welfare across Europe and any inconsistencies of the Regime with the GATT was justifiable under Articles XX(a) and XX(b).14 In addition, due to the inherently “inhumane” nature 2 Regulation (EC) No. 1007/2009 of the European Parliament and of the Council of Sep. 16, 2009 on Trade in Seal Products [2009] OJ L 286/36 [in subsequent footnotes use: Regulation No. 1007/2009]. 3 Commission Regulation (EU) No. 737/2010 of Aug. 10, 2010 Laying Down Detailed Rules for the Implementation of Regulation (EC) No. 1007/2009 of The European Parliament and of the Council on Trade in Seal Products [2010] OJ L 216/1 [in subsequent footnotes use: Regulation No. 1007/2009]. These two regulations will be referred to together as the “EU Seal Regime.” 4 Regulation No. 1007/2009. 5 WTO, European Communities — Measures Prohibiting the Importation and Marketing of Seal Products (EC-Seal Products): Reports of the Panel (November 25, 2013) WT/DS400/R and WT/DS401/R [7.1]. 6 Regulation No. 1007/2009, Art. 3. 7 Id. 8 Id. 9 WTO, European Communities — Measures Prohibiting the Importation and Marketing of Seal Products: First Written Submission of Canada (Nov. 9, 2012) WT/DS 400 [236]. 10 Id. 11 Id. [324]; WTO, European Communities — Measures Prohibiting the Importation and Marketing of Seal Products: First Written Submission of Norway (Nov. 9, 2012) WT/DS 401 [273]. 12 See EC-Seal Product: First Written Submission of Canada, fn. 9[347]; see EC-Seal Product: First Written Submission of Norway, fn. 11[273]. 13 See EC-Seal Product: First Written Submission of Canada, fn. 9[751]; see EC-Seal Product: First Written Submission of Norway, fn. 11[962]. 14 WTO, European Communities — Measures Prohibiting the Importation and Marketing of Seal Products: First Written Submission by the European Union (Geneva Dec. 21, 2012) WT/DS 400 and WT/DS 401. 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 89 of the commercial hunts, the EU held that a general ban on such products was the only effective way to address such moral concerns.15 After failing in their consultations, both Canada and Norway requested the WTO to set up a Panel to settle the dispute according to Articles 6 and 7.1 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).16 After an analysis of the EU Seal Regime, the Panel concluded that the EU had failed to demonstrate that the EU Seal Regime was necessary to protect public morals under Article XX(a) of the GATT.17 This conclusion was later upheld by the Appellate Body.18 This case laid the foundation for the interpretation and application of Article XX(a) of the GATT. Afterwards, Columbia and Brazil used Article XX(a) to justify their GATT-inconsistent measures, in the Columbia-Textiles and Brazil-Taxation disputes, respectively. The Panel in the EC-Seal Products elaborated the definition of “public morals” in the context of Article XX(a) of the GATT. In the Columbia-Textiles dispute, a comprehensive analysis of the necessity test under Article XX(a) was conducted, which formed a basis for the assessment conducted by the Panel in the Brazil-Taxation dispute. In this article, I will present an overview of Article XX of the GATT in Part I, including information on its structure and the method used to apply it. In Part II, I will elaborate on a definition of “public morals” in the context of Article XX(a) of the GATT and present the two-tier test to apply it. In Part III, I will present a detailed discussion on Article XX(a), including the history of “public morals” as an exception clause to justify trade-restrictive measures, the extraterritorial application of Article XX(a), necessary evidence to support the existence of a public moral, the difference between Article XX(a) and other exception clauses under Article XX of the GATT, and integrating human rights law and trade law with respect to the “public morals” exception. In the final part, I present a conclusion summarizing all the findings. I. OVERVIEW OF ARTICLE XX OF THE GATT Article XX of the GATT states: 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 15 See EC-Seal Products: Reports of the Panel, fn. 5[7.4]. WTO, European Communities — Measures Prohibiting the Importation and Marketing of Seal Products: Request for the Establishment of a Panel by Canada (Feb. 14, 2011) WT/DS400/4; WTO, European Communities — Measures Prohibiting the Importation and Marketing of Seal Products: Request for the Establishment of a Panel by Norway (Mar. 15, 2011) WT/DS401/5. 17 See EC-Seal Products: Reports of the Panel, fn. 5[7.651]. 18 WTO, European Communities — Measures Prohibiting the Importation and Marketing of Seal Products (EC-Seal Product) AB-2014-1 AB-2014-2: Reports of the Appellate Body (May 22, 2014) WT/DS400/AB/R and WT/DS401/AB/R [5.339]. 16 90 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 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: (a) necessary to protect public morals; (b) necessary to protect human, animal or plant life or health; […] (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; […] (g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption; […] Article XX is designed to respect the sovereign rights of each contracting party to protect their interests in specific areas such as public morals, human and animal health, and exhaustible natural resources, although this may go against other trade obligations under the GATT.19 In this part, I will analyze the chapeau and different exception clauses under Article XX, taking Articles XX(b), XX(d), and XX(g) as typical examples. These three clauses are most frequently invoked by the contracting parties in disputes before the DSB.20 Meanwhile, the legal standard, especially the requirements of “necessity” in different clauses, to test if the measures concerned can fall under the scope of Article XX are the same. Therefore, it is worth discussing these three typical clauses before analyzing Article XX(a). A. Chapeau of Article XX In order to be justified under Article XX of the GATT, the measures concerned must pass a two-tier test. According to an analysis of the Appellate Body in the US-Gasoline dispute, first, the measures in question must fall under one of the categories listed in Article XX(a) to (j); second, it needs to satisfy the requirements in the introductory clause of Article XX, namely the chapeau.21 19 John Jackson, The World Trading System: Law and Policy of International Economic Relations (2nd edition), The MIT Press (Cambridge), at 206 (1997). 20 See Repertory of Appellate Body Reports General Exceptions: Article XX of the GATT 1994, available at https://www.wto.org/english/tratop_e/dispu_e/repertory_e/g3_e.htm (last visited Mar. 26, 2017). 21 WTO, United States — Standards for Reformulated and Conventional Gasoline (US-Gasoline) AB-1996-1: Report of the Appellate Body (Apr. 29, 1996) WT/DS2/AB/R, 22. 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 91 The chapeau of Article XX requires that a measure at issue should not be applied in a manner that would give rise to an “arbitrary or unjustifiable discrimination between countries where the same conditions prevail” or a “disguised restriction on international trade.”22 This aims to strike a balance between the right of a contracting party to invoke the exception clauses under Article XX, and the duty it undertakes to respect the rights of other parties derived from the GATT,23 to avoid the abuse of the exception clauses under Article XX.24 To meet the requirements in the chapeau, the party invoking the exception clause must prove25 that the measure(s) in question did not cause: (1) arbitrary discrimination between countries where the same conditions prevail; (2) unjustifiable discrimination between countries where the same conditions prevail; and (3) a disguised restriction on international trade.26 The first and the second standards can be interpreted together. The term “arbitrary or unjustifiable discrimination between countries where the same conditions prevail” contains three elements: (1) that the application of the measures concerned has caused discrimination;27 (2) that the discrimination should be arbitrary or unjustifiable;28 and (3) that the discrimination exists between countries where the same conditions prevail.29 To determine the arbitrariness or unjustifiable nature of the discrimination, one should always seek recourse to the cause or the rationale underlying the discrimination.30 The Appellate Body in the US-Shrimp dispute decided that Section 609 of Public Law 101–162 (hereinafter referred to as “Section 609”)31 adopted by the United States caused “arbitrary or unjustifiable discrimination,” taking into account four different factors: (1) that Section 609 was too “single, rigid and unbending,”32 as there was barely any 22 WTO, United States — Import Prohibition of Certain Shrimp and Shrimp Products AB-1998-4 (US-Shrimp): Report of the Appellate Body (Oct. 12, 1998) WT/DS58/AB/R [150]. 23 Id. [156]. 24 See US-Gasoline: Report of the Appellate Body, fn. 21 at 22. 25 The burden of proof lies on the party invoking the exception clauses. See id. at 22–23. 26 See US-Shrimp: Report of Appellate Body, fn. 22[150]. 27 Id. 28 Id. 29 Id. 30 WTO, Brazil — Measures Affecting Imports of Retreaded Tyres AB-2007-4 (Brazil-Tyres): Report of the Appellate Body (Dec. 3, 2007) WT/DS332/AB/R [225]. 31 16 United States Code (U.S.C.) §1537. 32 See US-Shrimp: Report of Appellate Body, fn. 22[177]. 92 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 flexibility when officials made their decision on certification;33 (2) that the United States had failed to take into account the different conditions present in the territories of different states;34 (3) that the discrimination created by the application of Section 609 was difficult to “reconcile with the declared policy objective of protecting and conserving sea turtles”;35 and (4) that the United States had held negotiations with a few WTO members with respect to the implementation of Section 609, but did not do so with other members.36 Next, when it comes to “disguised restrictions on international trade,” the measures at issue usually ostensibly fall under the exception clauses of Article XX, but actually amount to arbitrary or unjustifiable discrimination in international trade.37 In other words, it can be read as embracing restrictions amounting to arbitrary or unjustifiable discrimination in international trade, taken under the guise of a measure that is formally within the scope of an exception listed under Article XX.38 B. Article XX(b): Protection of Life or Health of Human, Animal, or Plant Article XX(b) of the GATT relates to measures that are necessary for the protection of human, animal, or plant life or health. To establish the consistency of these measures with Article XX(b), as is confirmed by the Panel in the EC-Asbestos dispute, the party concerned should first establish a prima facie case that the policies in question pursue an objective of protecting human, animal, or plant life or health through the elimination or reduction of life-threatening or other health risks,39 for which the party should prove the existence of a risk in the first place. This is because the word “protection,” according to the Panel, implies the existence of a risk.40 Accordingly, as long as the party can prove that the policies it implements are aiming to reduce the exposure to a risk, such policies may fall under the scope of Article XX(b), insofar as the risk does exist.41 Next, the party should prove that the policies concerned are necessary to realize the 33 Id. Id. [163], [164]. 35 Id. [165]. 36 Id. [166], [172]. 37 See US-Gasoline: Report of the Appellate Body, fn. 21 at 25. 38 Id. 39 WTO, European Communities — Measures Affecting Asbestos and Products Containing Asbestos (EC-Asbestos): Reports of the Panel (Sep. 18, 2000) WT/DS135/R [8.184]; WTO, European Communities — Measures Affecting Asbestos and Products Containing Asbestos (EC-Asbestos): Reports of the Appellate Body (Mar. 12, 2001) WT/DS135/AB/R [172]. 40 See EC-Asbestos: Reports of the Panel, fn. 39[8.184]. 41 Id [8.186]. 34 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 93 purpose of protecting human, animal, or plant life or health, as the Panel explained in the Thailand-Cigarettes dispute: The import restrictions imposed by Thailand could be considered to be “necessary” in terms of Article XX(b) only if there were no alternative measure consistent with the General Agreement, or less inconsistent with it, which Thailand could reasonably be expected to employ to achieve its health policy objectives.42 Accordingly, a policy that is necessary under Article XX(b) should be sufficiently effective to protect the life or health that it intends to protect, and should be reasonably available.43 As for the second condition, the Panel in the EC-Asbestos dispute found that whether a policy is reasonably available or not should be considered in light of the administrative and economic reality that the party is facing.44 One policy may be easier to implement than the other, but this does not mean that the other policy is not reasonably available.45 C. Article XX (d): Necessary to Secure Compliance with Laws Article XX(d) of the GATT addresses measures that are necessary to secure compliance with domestic laws. To invoke this exception clause, a party must demonstrate that: (1) the policy concerned is designed to secure the compliance with its domestic law, which is not inconsistent with the GATT; and (2) the policy is necessary to realize such an objective. The relevant domestic law should be considered as prima facie GATT-compatible,46 meaning that it is not necessary for the respondent to go through every article of the domestic law. The respondent simply needs to prove that the relevant provisions in the domestic law meet the criterion in Article XX(d).47 In addition, there are several types of legislation that are not covered by Article XX(d). First, the relevant legislation should be an enforcement mechanism according to the Panel’s findings in the US-Gasoline dispute.48 Rules that are merely meant to determine an individual baseline cannot be considered as “laws or regulations” under Article 42 Thailand — Restrictions on Importation of and Internal Taxes on Cigarettes (Thailand-Cigarettes): Report of the Panel (1990) GATT BISD DS10/R - 37S/200 [75]. 43 See EC-Asbestos: Reports of the Panel, fn. 39[8.208]. 44 Id. [8.207]. 45 Id. 46 Joost Pauwelyn, Andrew Guzman & Jennifer Hillman, International Trade Law (3rd edition), Wolters Kluwer Law & Business (New York), at 408 (2016). 47 Id. 48 WTO, United States — Standards for Reformulated and Conventional Gasoline (US-Gasoline): Report of the Panel (Jan. 29, 1996) WT/DS2/R [6.33]. 94 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 XX(d). 49 Second, the term “laws or regulations” generally refers to domestic legislation.50 It does not apply to measures that induce another contracting party to fulfill its international obligations. 51 In addition, the term “to secure compliance” also circumscribes the scope of Article XX(d) to a party’s domestic legislation. 52 Consequently, an “international countermeasure,” although aiming to secure compliance with another party’s obligations, is not covered by this provision, as it seeks to ensure the fulfillment of an international obligation.53 The second condition is the necessity for the relevant policy. In the Korean-Beef dispute, the Appellate Body pointed out that the word “necessary” here is not confined to “absolutely necessary,”54 but rather, contains a range in degrees of necessity.55 While assessing the necessity of a policy, three different factors may be taken into account, namely the significance of the common interests or value that the policy aims to protect, the contribution that the policy makes to the objective, and the extent of the restrictive effects that the compliance of the policy exerts.56 This is also addressed in the Mexico-Soft Drink dispute, in which the Appellate Body put forward that the necessity test here was different from the one in the US-Gambling dispute, as the former did not need evidence of “absolute certainty.”57 D. Article XX(g): Conservation of Exhaustible Nature Resources Article XX(g) applies to measures relating to the conservation of exhaustible natural resources. First, the term “exhaustible natural resources” embraces both living and non-living resources.58 It has to be emphasized that “exhaustible” and “renewable” are not mutually exclusive.59 Second, measures “made effective in conjunction with” should be interpreted as measures imposing restrictions not only on imported products but also on domestic products.60 This requirement refers to a sense of “even-handedness” in the 49 Id. WTO, Mexico — Tax Measures on Soft Drinks and Other Beverages (Mexico-Soft Drink) AB-2005-10: Report of the Appellate Body (Mar. 6, 2006) WT/DS308/AB/R [69]. 51 WTO, Mexico — Tax Measures on Soft Drinks and Other Beverages (Mexico-Soft Drink): Report of the Panel (Oct. 7, 2005) WT/DS308/R [8.181]. 52 See Mexico-Soft Drink: Report of the Appellate Body, fn. 50[72]. 53 Id. [75]. 54 WTO, Korea — Measures Affecting Imports of Fresh, Chilled and Frozen Beef AB-2000-8 (KoreanBeef): Report of the Appellate Body (Dec. 11, 2000) WT/DS161/AB/R and WT/DS169/AB/R [161]. 55 Id. 56 Id. [162], [163]. 57 See Mexico-Soft Drink: Report of the Appellate Body, fn. 50[74]. 58 See US-Shrimp: Report of the Appellate Body, fn. 22[130]. 59 Id. [128]. 60 US-Gasoline: Report of the Appellate Body (fn. 21); WTO, China — Measures Related to the Exportation of Various Raw Materials (China-Raw Materials): Reports of the Panel (Jul. 5, 2011) WT/DS394/R and WT/DS395/R and WT/DS398/R [356]. 50 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 95 imposition of restrictions.61 However, this does not mean that the measures concerned must be “primarily aimed at” domestic products.62 There are no additional requirements on domestic products as seen in Article XX(g).63 Finally, the term “relating to” should be interpreted in combination with Article III:4 regarding the National Treatment obligation.64 Neither should the former subvert the object and purpose of the latter, nor should the latter emasculate the policies and interests embodied in the former. 65 Article XX(g) only requires measures “relating to” the conservation of exhaustible natural resources instead of “necessary” or “essential” to this objective.66 This means that Article XX(g) contains a wide range of measures.67 The purpose of this exception clause is only to ensure that the general commitment to trade liberalization in the GATT does not prevent national policies from pursuing the conservation of exhaustible natural resources.68 II. APPLICATION OF ARTICLE XX(A) OF THE GATT A. Definition of “Public Morals” Before the ruling in the EC-Seal Products dispute, the term “public morals” under Article XX(a) of the GATT had never been interpreted by the DSB before. In the US-Gambling dispute, the Panel once interpreted this term in the context of Article XIV(a) of General Agreements on Trade in Services (GATS). This interpretation was cited by the Panel in the EC-Seal Products dispute. The Panel stated that “the term ‘public morals’ denotes standards of right and wrong conduct maintained by or on behalf of a community or nation.”69 Meanwhile, the content of “public morals” can vary with time and space,70 as the contracting parties can decide the appropriate protection levels according to their own social, cultural, religious, and ethical values.71 This is applicable under both Article XX(a) 61 See US-Gasoline: Report of the Appellate Body, fn. 21 at 21. See China-Raw Materials: Reports of the Panel, fn. 60[358]. 63 Id. 64 See US-Gasoline: Report of the Appellate Body, fn. 21 at 18. 65 Id. 66 Canada — Measures Affecting Exports of Unprocessed Herring and Salmon (Canada-Herring): Report of the Panel (1987) GATT BISD L/6268 - 35S/98 [4.6]. 67 Id. 68 Id. 69 See EC-Seal Products: Reports of the Panel, fn. 5[7.380]. 70 WTO, United States — Measures Affecting the Cross-Border Supply of Gambling and Betting Services (US-Gambling): Report of the Panel (Nov. 10, 2004) WT/DS285/R [6.461]. 71 Id. 62 96 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 of GATT and Article XIV(a) of GATS.72 B. Two-Tier Test Establishing a Justification under Article XX(a) 1. The Measure Must Be “Designed” to Protect Public Morals. — In the Columbia-Textiles dispute, the Appellate Body stated that the first step in setting up a justification under Article XX(a) is to assess whether the measure concerned was “designed” to protect public morals. 73 An initial, threshold examination of this assessment aims to determine whether there is a relationship between the measure and the protection of public morals.74 The standard set by the Appellate Body to determine such a relationship is quite simple: The measure in question only needs to be “not incapable” of protecting public morals, and this indicates such a relationship exists between the measure and the protection of public morals.75 This means, as far as I am concerned, as long as the otherwise GATT-inconsistent measure has a slight possibility of protecting public morals, it has passed the initial threshold examination of the first step as a justification under Article XX(a). The broad discretion granted to contracting parties in terms of the content of public morals and the simple threshold to test the existence of a relationship between the measures concerned and the protection of public morals both show the liberal attitude on part of the DSB toward the first step to assess the justification of the measures under Article XX(a) of the GATT. Although this indicates respect for the sovereignty of contracting states, there may also be a high risk of abusing the “public morals” justification. In other words, what is the line between a policy with an economic or social objective and public morals?76 The definition of “public morals” as stated by the DSB entails a high and strict standard, namely standards of right and wrong conduct maintained by or on behalf of a community or nation. However, would the objectives pursued by every policy represent a standard of conduct entertained by the whole nation? Would a policy encouraging investment or a legislation aiming to boost a certain industry such as tourism or agriculture be categorized as a policy protecting public morals? If one has to relate a policy to a moral concern maintained by the whole nation, then most policies can be related to human rights, raising people’s living standards, or economic development. However, in my opinion, the DSB should set up a standard as to how close 72 Id. WTO, Colombia — Measures Relating to the Importation of Textiles, Apparel and Footwear (Columbia-Textiles): Report of the Appellate Body (Jun. 7, 2016) WT/DS461/AB/R [5.67]. 74 Id. [5.68]. 75 Id. 76 Akhil Raina, My Morals, Your Trade, Our WTO: Public Morals after Brazil — Taxation, Linklaters, available at https://www.linklaters.com/en/insights/blogs/tradelinks/my-morals-your-trade-our-wto-publicmorals-after-brazil-taxation (last visited Nov. 30, 2018). 73 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 97 the measure in question is related to the public morals submitted by the contracting party. Otherwise, a relationship can be set up between almost every policy or legislation and some type of public moral. 2. The Measure Must Be Necessary to Protect Such Public Morals. — If the measure passes scrutiny under the first step, in the second step its necessity for the protection of public morals must be proved. The Appellate Body in the Columbia-Textiles dispute concluded a four-step process to analyze the necessity of a measure for the protection of public morals based on previous cases. The first step is to assess the “relative importance” of the interests or values reflected in the objective of the measure.77 The importance of the objective should fall under the discretion of the contracting parties, which will be addressed in the following part.78 Nevertheless, the importance of the objective has to be supported by sufficient evidence.79 The second step of the necessity test is to examine the contribution of the measure to the objectives it pursues.80 It can be proceeded with in either a qualitative or quantitative manner.81 It must also be analyzed together with other factors in the necessity test, instead of being adopted alone to determine whether the measure is necessary.82 The same opinion was delivered by the Appellate Body in the EC-Seal Products dispute, which considered the Panel’s analysis as relying too much on the contribution of the measure and thus, reversed its decision, pointing out that an analysis of necessity involves a “holistic” balancing and weighing of a series of factors, including the importance of the objective, the level of the contribution achieved by the measures and the trade-restrictiveness of the measures.83 The third step is to review the trade-restrictiveness of the measure with respect to international commerce. 84 To establish that the measure at hand is necessarily trade-restrictive, sufficient evidence must be submitted to prove the trade-restrictiveness with certainty and clarity. In the Columbia-Textiles dispute, Columbia did not indicate the certainty with which its compound tariff could be considered less trade-restrictive than an import ban.85 Therefore, the Appellate Body did not support Columbia’s arguments in terms of the trade-restrictiveness of the compound tariff. The final step is to find out whether any less trade-restrictive alternatives are 77 See Columbia-Textiles: Report of the Appellate Body, fn. 73[5.71]. See Part III Section F.2. 79 See Part III Section E. 80 See Columbia-Textiles: Report of the Appellate Body, fn. 73[5.72]. 81 Id. 82 Id. 83 See EC-Seal Products: Report of the Appellate Body, fn. 18[5.214]. 84 See Columbia-Textiles: Report of the Appellate Body, fn. 73[5.73]. 85 Id. [5.113]. 78 98 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 reasonably available.86 The alternative shall not only be less trade-restrictive but shall also preserve the contracting parties’ right to achieve the level of protection they desired with respect to the objectives they pursued.87 It shall make a meaningful contribution to the contracting parties’ public moral concerns.88 In the EC-Seal Products dispute, a proposed hypothetical regime such as addressing the EU’s public participation in the market for products derived from inhumane killing and a stringent certification system was considered by the Panel as difficult to implement and enforce, since it was likely to lead to more inhumane killing of seals.89 Furthermore, making the welfare standards or the certification or labeling system more lenient cannot make a meaningful contribution to the EU’s animal welfare concerns.90 Therefore, the Panel held that the alternative regime was not reasonably available. Another question that needs to be addressed is that if a measure did not pass the previous steps, for example, the contribution and the trade-restrictiveness tests, it would be unnecessary to proceed to the final step. This is what happened in the Columbia-Textiles dispute.91 III. A FURTHER DISCUSSION OF “PUBLIC MORALS” EXCEPTION After the analysis of Article XX of the GATT and its application in the EC-Seal Products dispute, with a brief introduction of Article XX(a), I will present a detailed discussion of the “public morals” exception in this part. First, I will introduce the historical development of this exception clause and its implementation in different countries and regions. Second, I will discuss topics that were not covered in the assessment of the DSB in the EC-Seal Products dispute, including the types of “public morals” and its extraterritorial application, and the difference between this exception clause and other clauses. Third, I will analyze the type of evidence that is necessary to support the existence of “public morals.” Finally, I will explore the potential of integrating human rights law with trade law regarding the “public morals” exception. A. Historical Development of the “Public Morals” Exception Clause 1. “Public Morals” as an Exception in the Pre-GATT Era. — Charnovitz has conducted comprehensive research on the history of the “public morals” exception before the GATT. 92 It was not until 1927 that the “public morals” exception became a 86 Id. [5.74]. Id. [5.115]. 88 See EC-Seal Products: Report of the Appellate Body, fn. 18[5.279]. 89 Id. 90 Id. 91 See Columbia-Textiles: Report of the Appellate Body, fn. 73[5.115]. 92 See Steve Charnovitz, The Moral Exception in Trade Policy, 38 Virginia Journal of International Law 689 (1998). 87 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 99 long-established international practice to balance free trade and the sovereign rights of states.93 At that time, opium, obscene photos, and lottery tickets clearly fell within the scope of this exception.94 The idea of bringing in a “public morals” exception was first put forward by the United States in 1945,95 with the language of the exception clause in the United States’ proposal being the same as that incorporated into the GATT.96 During the drafting period of the GATT, this exception was included every time the draft was edited.97 However, there was no elaboration on the exact meaning of “public morals” in the preparatory work of the GATT.98 The contracting parties were also very reluctant to invoke this exception clause,99 with “alcohol” being the only thing that can be deduced from the drafting history covered by this exception.100 2. “Public Morals” in Contemporary Society. — In this section, I will analyze the “public morals” exception in three countries/areas, namely Europe, the United States and China. The practice in these three countries/areas represents a set of typical examples that illustrate the implementation of the “public morals” exception. First, in Europe, there is a widespread concern for animal welfare, especially for the treatment of farm animals in recent years.101 This explains the background of the EC-Seal Products dispute. Second, in the United States, people also attach great importance to moral concerns while regulating trade, especially pertaining to labor rights. At the end of the Uruguay Round, the United States, together with France, proposed that the WTO agenda should include considerations on the relationship between trade and labor standards and social justice.102 In the WTO’s failed 1999 Seattle Ministerial, it proposed the creation of a WTO working party on labor rights that would focus on a range of areas such as social protections and core labor standards.103 Finally, in China, there are also trade restriction clauses, which relate to “public morals” in Chinese society. For example, before the EC-Seal Products 93 Id. at 708. 94 Id. 95 Mark Wu, Free Trade and the Protection of Public Morals: An Analysis of the Newly Emerging Public Morals Clause Doctrine, 33(1) Yale Journal of International Law, 218 (2008). 96 See Charnovitz, fn. 92 at 704. 97 Id. 98 Id. 99 Stefan Zleptnig, Non-Economic Objectives in WTO Law: Justification Provisions of GATT, GATS, SPS and TBT Agreements, Martinus Nijhoff (Leiden), at 129 (2010). 100 See Charnovitz, fn. 92 at 705. 101 Better Welfare for Animals: A New EU Strategy for a New Approach, Available at https://ec. europa.eu/food/sites/food/files/animals/docs/aw_brochure_strategy_en.pdf (last visited Feb. 8, 2017). 102 John Jackson, William Davey & Alan Sykes, Jr., Legal Problems of International Economic Relations (4th edition), West Group, at 1033 (2002). 103 Id. at 1034. 100 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 dispute, China once invoked Article XX(a) in the China-Audiovisuals dispute.104 The background of this case is a good example to illustrate the moral concerns and the relevant regulations in China. Although both the Panel and the Appellate Body did not elaborate on this clause, it is still worth discussing the moral concerns in China. (1) “Public Morals” in Europe Over the past 40 years, European people have been working on the promotion of animal welfare, especially for farm animals.105 Article 13 of Title II in the Treaty of Lisbon clearly recognizes that animals are sentient beings.106 Another example is the debate over the ban on imports of fur from animals caught by leg-hold traps.107 Besides this, the EU has a number of directives concerning animal welfare. 108 Domestic legislation in some EU member states is even stricter.109 The Council Directive 98/58/EC on the protection of animals kept for farming purposes, which is based on the European Convention for the protection of animals kept for farming purposes, reflects five freedoms for animals that the EU is protecting.110 All these concerns derive from the deeply-rooted animal welfare philosophy and religious beliefs present in Europe.111 (2) “Public Morals” in the United States The law in United States has prohibited the importation of products made by child labor, which reflects the moral concern over this issue in U.S. society. Early in 1994, Section 307 of the Tariff Act of 1930 prohibited forced labor, with the legislative history of this Act revealing that “forced labor” includes forced child labor.112 The Generalized System of Preferences in the United States grants duty-free benefits to developing countries, contingent on the satisfaction of certain requirements, including that the applicant country has taken or is taking steps to realize “internationally recognized worker rights” for workers in that country.113 The “internationally recognized worker 104 WTO, China — Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (China-Audiovisual): Report of the Panel (Aug. 12, 2009) WT/DS363/R. 105 Animal Welfare, available at http://ec.europa.eu/food/animals/welfare_en (last visited Feb. 8, 2017). 106 Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing the European Community [2007] OJ C306/1. 107 See Part III Section D. 108 Harald Grethe, High Animal Welfare Standards in the EU and International Trade — How to Prevent Potential “Low Animal Welfare Havens”?, 32(3) Food Policy, 317 (2007). 109 Id. 110 See Animal Welfare, fn. 105. The “Five Freedoms” are: freedom from hunger and thirst; freedom from discomfort; freedom from pain, injury, and disease; freedom to express normal behavior; freedom from fear and distress. 111 See Howse, fn. 1 at 378. 112 Janelle M. Diller & David A. Levy, Child Labor, Trade and Investment: Toward the Harmonization of International Law, 91 American Journal of International Law, 687 (1997). 113 19 U.S.C. §2462(c) (7) (1994). 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 101 rights” also includes a minimum age for the employment of children.114 Later in 1997, Section 634 of the Treasury and General Government Appropriations Act forbade border officials from allowing products made by indentured child labor into the US.115 In the GATT, the only exception clause concerning labor issues is Article XX(e), which allows for restricting measures “relating to the products of prison labor.” Other than this, there are no exception clauses regulating measures concerned with labor standards. Therefore, if America’s moral concern about child labor provokes litigation before the WTO, it would be best to use Article XX(a) of the GATT to defend the relevant measures,116 except when the measures specially relate to prison child labor. Diller and Levy have argued that Article XX(b) of the GATT can provide a context for claiming an exception to measures banning the importation of products made by child labor.117 However, invoking Article XX(b) sounds awkward. This concerns the difference between Articles XX(a) and XX(b), which will be demonstrated in detail in the part below.118 To briefly illustrate this specific question, if the contracting party intends to apply Article XX(b), it should establish that the policies in question pursue the objective of preserving human life or health through the elimination or the reduction of health risks posed by the products. However, the ban on the import of products made by child labor is more about eliminating or reducing health risks posed to children by the producing process. Thus, Article XX(a) of the GATT would be a better defense, as it reflects a general moral concern over a healthy growing environment for children. (3) “Public Morals” in China In the China-Audiovisuals dispute, the United States claimed that China’s measures on the import and distribution of certain publications and audiovisual entertainment products breached its commitments under the WTO. China invoked Article XX(a) to defend its argument that the measures concerned were aimed at protecting public morals in Chinese society.119 It was important to implement the content review system to select the products that were consistent with the public morals in China.120 Unfortunately, both the Panel and the Appellate Body failed to explain the meaning of “public morals.” This was mainly because the United States did not question whether China’s measures could fall under Article XX(a). What they disagreed over was the necessity of China’s measures altogether. 114 19 U.S.C. §2462(a). Treasury and General Government Appropriations Act, 1998, Pub. L. No. 105-61, § 634, 111 Stat. 1272, 1316 (1997). 116 See Charnovitz, fn. 92 at 740. 117 See Diller & Levy, fn. 112 at 682. 118 See Part III Section D. 119 See China-Audiovisual: Report of the Panel, fn. 104[7.753]. 120 Id. [7.755]. 115 102 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 This case reflects the moral concerns in China, especially with respect to cultural products. In this case, China argued that the content review system governing the importation of cultural goods, especially the measures at issue, was to prevent the entry of products with contents involving violence, pornography, and so on.121 This was to protect the important values enshrined in Chinese society, including “Chinese cultural and traditional values.”122 Such values are stated in various regulations such as Article 3(7) of the Regulations on the Administration of Audio and Video Products,123 Article 25(7) of the Regulation on the Administration of Publication124 and Article 6(7) of the Measures for the Administration of Import of Audio and Video Recordings.125 However, compared with the moral concerns in the EU and the United States, the scope of moral concerns in China still remain ambiguous. At least in the China-Audiovisual dispute, China failed to argue clearly and straightforwardly as to what the key value is that it wanted to protect. All we can see of the scope of “public morals” in China are vague expressions such as “Chinese cultural and traditional values.”126 As Australia submitted, not all products having cultural value to a contracting party would automatically be encompassed by the term “public morals” in Article XX(a) of the GATT.127 China has to show that there is a close enough relationship between the cultural 121 Id. [7.714]. Id. 123 Regulations on the Administration of Audio and Video Products (2016 Revised) (effective Feb. 1, 2002, issued Feb. 6, 2016) CLI.2.270896, Art. 3(7): People engaged in the publication, manufacture, reproduction, import, wholesale, retail, and lease of audio and video products shall abide by the Constitution and the relevant laws and regulations, adhere to the orientation of serving the people and serving socialism and disseminate ideas, morals and scientific, technical and cultural knowledge beneficial to economic development and social progress. The following contents are prohibited from being recorded in audio and video products: […] (7) that which propagates obscenity, gambling, violence or instigates crimes; […] 124 Regulation on the Administration of Publication (2016 Revised) (effective Feb. 1, 2002, issued Feb. 6, 2016) CLI.2.270929, Art. 25(7): The following contents are prohibited from being included in any publication: […] 7.Which propagate obscenity, gambling, violence or instigate crimes; […] 125 Measures for the Administration of Import of Audio and Video Recordings (2011 Revised) (effective Apr. 6, 2011, issued Apr. 6, 2011) CLI.4.149796, Art. 6(7): The state shall prohibit the import of audio and video recordings with any of the following contents: […] (7) content that propagates obscenity, gambling or violence or instigates crimes; […] 126 See China-Audiovisual: Report of the Panel, fn. 104[7.714]. 127 Id. [5.12]. 122 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 103 values in the products and the standards of right and wrong conduct maintained in China. However, there was neither a straight nor clear answer in China’s submission with respect to what the standards of right and wrong conduct were in Chinese society, and what the relationship was between the cultural values in the products concerned and the standards of right and wrong conduct. If China had a more elaborate and clearer response to this question, their submissions on the necessity of the measures in the case would have been more persuasive. B. Arguments in Favor of “Public Morals” as an Exception Clause Justifying Trade-Restrictive Measures As Charnovitz argued, the danger of the protectionist abuse of Article XX(a) of the GATT is real, since virtually anything can be characterized as a moral issue.128 Therefore, scholars worry that the tensions between trade and moral issues may pose a deep and dangerous challenge to the WTO law.129 The fact that there were barely any indications in the preparatory work of the GATT for the reason to include “public morals” as an exception clause under Article XX to justify trade-restrictive measures does not reduce the importance of this clause. No matter whether it is in the context of Article XX of the GATT in general, or in its own nature, the “public morals” exception clause is significant in easing the tensions between trade and moral issues. 1. National Sovereignty. — First, Article XX(a) allows the contracting parties to preserve certain aspects of its national sovereignty over its domestic moral issues while participating in the international trade regime under the WTO.130 This is consistent with the function of Article XX in general.131 Although it did not point out the object and purpose of Article XX(a) of the GATT in its case law, the WTO DSB has generally elucidated one of the other exception clauses in Article XX. Examples can be found in the Thailand-Cigarettes dispute132 and the US-Tuna-Dolphin (I) dispute133 for Article XX 128 See Charnovitz, fn. 92 at 731. Robert Howse, Joanna Langille & Katie Sykes, Pluralism in Practice: Moral Legislation and the Law of the WTO after Seal Products, (2015) New York University Public Law & Legal Theory Research Paper Series Working Papers, Paper 506, 93, available at http://lsr.nellco.org/nyu_plltwp/506/ (last visited May 3, 2017). 130 Christoph T. Feddersen, Focusing on Substantive Law in International Economic Relations: The Public Morals of GATT’s Article XX(a) and “Conventional” Rules of Interpretation, 7 Minnesota Journal of Global Trade, 77 (1998). 131 See Part I. 132 See Thailand-Cigarettes: Report of the Panel, fn. 42 [73]. 133 See United States — Restrictions on Imports of Tuna (US-Tuna-Dolphin (I)) (1991) DS21/R 39S/155 [5.27]. The Panel Report was circulated in 1991 but not adopted due to Mexico’s refusal to pursue the case further. Therefore, the report does not have the status of a legal interpretation of the GATT law. However, it can still be a reference while discussing the extraterritorial effects of Art. XX of the GATT. The introduction of this case is available at https://www.wto.org/english/tratop_e/envir_e/edis04_e.htm (last visited May 6, 2017). 129 104 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 (b), and in the Canada-Herring dispute for Article XX(g).134 Therefore, we can draw the same conclusion that Article XX(a) is important in the sense that it allows the contracting parties to preserve their sovereignty over moral issues as do other exception clauses under Article XX, and strikes a balance between international trade and national moral concerns. 2. Intrinsic Importance of “Public Morals.” — The “public morals” exception also has its own intrinsic importance. First, “public morals,” as a non-economic subject matter, is per se a vital aspect of our societies.135 The Appellate Body recognized this in the US-Gasoline dispute, stating that the exception clauses under Article XX of the GATT are designed to protect important state interests.136 Free trade is the means to realize the objective of “raising the standards of living,” as the preambles of both the GATT and Agreement Establishing the World Trade Organization (WTO Agreement) state. Free trade is not the end of everything, but rather, has to work together with other non-economic subject matter, including “public morals,” to raise the standards of living of human beings. Moreover, as its definition states, “public morals” denotes a standard of right and wrong conduct. It signifies the basic social value of a society. In ancient Rome, boni mores was recognized as “the basis of the Roman legal system and life.”137 In the contemporary international arena, it also appears in many constitutional charters and international covenants. 138 Therefore the “public morals” exception is of great importance in international relations. C. Types of “Public Morals” and Questions of Its Extraterritorial Application Charnovitz139 has divided measures protecting public morals into two categories. The first is the “outwardly-directed” measure, namely the measure that aims to safeguard the morals of foreigners residing outside one’s own country. 140 The second is the “inwardly-directed” measure, which aims to protect the morals of nationals in one’s own country. 141 Wu, 142 however, explores three categories, further splitting Charnovitz’s 134 See Canada-Herring: Report of the Panel, fn. 66[4.6]. See Zleptnig, fn. 99 at 93–95. 136 See US-Gasoline: Report of the Appellate Body, fn. 21 at 29. 137 Roberto Perrone, Public Morals and the European Convention on Human Rights, 47 Israel Law Review, 361 (2014). 138 Id. at 362. Perrone named plenty of constitutions within the European Union, such as the Constitution of the Netherlands (1815) under Art. 7(3), the Constitution of Italy (1948) under Arts. 19 and 21(6), and the Basic Law of the Federal Republic of Germany (1949) under Art. 2(1). International covenants include the International Covenant on Civil and Political Rights, the Convention on the Rights of the Child, and so on. 139 See Charnovitz, fn. 92 at 695. 140 Id. 141 Id. 142 See Wu, fn. 95 at 235. 135 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 105 “outwardly-directed” measure into two types. “Type I” is the same as the “inwardly-directed” measures as proposed by Charnovitz.143 “Type II” refers to measures that aim to protect morals directly involved in the production of the products or services in the exporting country.144 “Type III” does not directly relate to the production of the products, but involves measures that limit importation from a country whose practices are considered morally offensive by the importing state.145 It is more about using trade limitations to raise objections against the immoral practices of the exporting country, rather than their products. No matter what category the limitations may belong to, one key question here is whether Article XX(a) can have extraterritorial application. Bal concluded that given the measures based on Article XX(e) on products made by prison labor would have an extraterritorial effect, analogous reasoning could be applied to other clauses such as Article XX(a).146 Many other scholars, including Wu,147 and Howse, Langille, and Sykes support this position.148 There has never been a WTO case law addressing this question in connection with Article XX(a) of the GATT, but the Panel has delivered its opinion in the US-Tuna-Dolphin (I) dispute on a similar question concerning the application of Article XX(b). The Panel in the US-Tuna-Dolphin (I) dispute rejected the extraterritorial effect of Article XX(b),149 because this would influence the multilateral framework established by the GATT, and the GATT would provide legal security only in respect of trade between a limited number of contracting parties with identical internal regulations.150 Based on the reasoning in the US-Tuna-Dolphin (I) dispute, Schoenbaum argued that chaos and anarchy would appear if every contracting party was allowed to impose its own domestic standards on other parties.151 Indeed, it is unfair to force other countries to obey one country’s own moral standards. However, there are still some moral standards that can apply extraterritorially. These are jus cogens norms,152 and some shared fundamental values enshrined in widely accepted international treaties, such as some basic human 143 Id. Id. 145 Id. 146 Salman Bal, International Free Trade Agreements and Human Rights: Reinterpreting Article XX of the GATT, 10 Minnesota Journal of Global Trade, 107 (2001). 147 See Wu, fn. 95 at 236. 148 See Howse, Langille & Sykes, fn. 129 at 126. 149 See US-Tuna-Dolphin (I), fn. 133[5.27]–[5.28]. 150 Id.[5.27] 151 Thomas J. Schoenbaum, Free International Trade and Protection of the Environment: Irreconcilable Conflict?, 86 American Journal of International Law, 703 (1992). 152 See Bal, fn. 146 at 94. 144 106 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 rights values.153 D. The Difference between the “Public Morals” Exception and Other Exceptions Though there have been only a few cases where the “public morals” exception has been invoked, the clause is still significant in balancing free trade and state sovereignty. The “public morals” exception has a distinct meaning for justifying the measures adopted by contracting parties that are inconsistent with the obligations under the GATT. First, this exception clause can cover measures regulating the method to produce a product. Compared with Article XX(b) of the GATT, sometimes a policy aiming to protect public morals can also fall under the category of protecting human, animal, or plant life or health, such as the EU Seal Regime in the EC-Seal Products dispute. Nevertheless, there are more cases where the issue may be problematic, particularly if the scopes of both articles are mixed. Article XX(a) can address areas that Article XX(b) cannot reach. For example, the European Community once enacted an EC Regulation on Pelts and Fur.154 This regulation was designed to ban on import of fur from animals caught by leg-hold traps.155 When an animal happens to fall in the trap, its limb will be caught but the animal will not die immediately.156 However, these trapped animals will eventually die out of fear, thirst, and loss of blood.157 Concerned about the welfare of these potential trapped animals, the EU decided to ban the import of fur from such animals to prevent such inhumane killing. Unsurprisingly, this regulation provoked objections from other contracting parties such as the United States, which threatened to submit this dispute to the WTO.158 Finally they made a compromise that the United States would prohibit the use of trap within the next six years.159 Imagining this dispute was submitted to the WTO and the EU based its claims on Article XX(b) rather than on Article XX(a), the arguments might be hard to structure. As the EU did not intend to ban the killing of such animals, what they addressed was the inhumane method used to kill these animals,160 with the rationale behind this ban being the overall concern prevailing in European society for the harm caused to the feelings of 153 Debra P. Steger, Afterword: The “Trade and...” Conundrum — A Commentary, 96 American Journal of International Law, 144 (2002). 154 See Feddersen, fn. 130 at 98. 155 Id. 156 Peter V. Michaud, Caught in a Trap: The European Union Leg-Hold Trap Debate, 6 Minnesota Journal of Global Trade, 358 (1997). 157 Id. 158 See Feddersen, fn. 130 at 102. 159 Id. 160 Id. 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 107 animals. Under such circumstances, Article XX(a) of the GATT would be more suited to base their arguments on. Furthermore, except for abovementioned cases, where the policy in question has domestic legislation to support the public morals that it seeks to protect, there are other cases where the public morals are purely out of psychological reasons, such as religion or belief. E. Necessary Evidence to Support Invoking Article XX(a) The “public morals” exception in Article XX(a) of the GATT is relatively subjective in nature. As the Panel stated in the EC-Seal Products dispute, the scope of “public morals” vary from time to time and from space to space.161 Hence, the contracting parties have a broad discretion while invoking this clause. Consequently, there is a risk of abuse of this clause. To prevent Article XX(a) from being abused, it is essential to set up a strict standard to assess the evidence supporting the existence of a certain type of moral concern. If the threshold is too low, then any contracting party can invent a moral concern and invoke Article XX(a) to impose trade-restrictive measures and protect their domestic industry. Therefore, it is necessary to discuss the problem of evidence. The more objective and stricter the standard of evidence is, the less possible it is for such a subjective exception clause to be abused. Accordingly, I will analyze five types of evidence that have been used, or might be used in the application of Article XX(a) of the GATT, namely the text of the regulations concerned and the legislative history, the form of the measures, opinion polls/public surveys, scientific evidence, and religious or moral origins. 1. The Text of the Regulations Concerned and the Relevant Legislative History. — In the EC-Seal Products dispute, the evidence relied on most was the text of the EU Seal Regime and the relevant legislative history. The Panel concluded that the text of the EU Seal Regime, together with the previous initiatives such as the 2006 “Declaration of the European Parliament on banning seal products in the European Union” (hereinafter referred to as “Parliament Declaration”) and the proposal submitted by the European Commission in 2008 (hereinafter referred to as “Commission Proposal”), supported the argument that public concern for seal welfare constitutes a moral issue for EU citizens.162 Similarly, in the Columbia-Textiles dispute, Columbia submitted its domestic criminal code and other relevant documents indicating that money-laundering was a form of criminal conduct in Columbia, and thus argued that the compound tariff against money-laundering was related to public morals in Columbian society.163 In addition, 161 See EC-Seal Products: Report of the Panel, fn. 5[7.380]. See EC-Seal Products: Reports of the Panel, fn. 5[7.385]–[7.389], [7.390]–[7.397]. 163 WTO, Columbia-Measures relating to the importation of Textiles, apparel and footwear (ColumbiaTextiles): Report of the Panel (Nov. 27, 2015) WT/DS461/R.[7.335]. 162 108 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 Columbia also submitted international instruments on fighting money-laundering, to which it was a party.164 However, the assessment of the evidence by the DSB was always too simple. A mere reference to domestic and international legislation is insufficient to establish the existence of a moral concern in a given society. The contracting parties only need to hire skillful legislators to meet this low threshold.165 There would be a high risk of abusing this exception clause as a disguise for trade protectionism.166 2. Form of the Measures. — In his article on a systematic analysis of the “public morals” exception clause and the EC-Seal Products dispute, Howse suggested looking at the form of the measures — particularly to see whether they apply to both domestic and imported products, or aim at imported products alone.167 This type of evidence is helpful in the sense that if the measures concerned aim only at imported products, it is hard to believe that they are genuinely necessary to protect the public morals in question. 3. Opinion Polls and Public Surveys. — In order to support their arguments on the moral concerns pertaining to seal welfare, the EU also submitted the results of an opinion poll. A multi-country survey conducted after the adoption of the measure at issue in 11 member states confirmed that these concerns were prevalent in the EU.168 The Panel ruled that the results of the surveys demonstrated the public concern prevailing in the EU, but only to a limited extent.169 First, some of the surveys were conducted in countries outside the EU. Thus, they could not provide sufficient guidance while assessing the moral concerns within the EU countries.170 Second, the results of the surveys did not demonstrate whether it was acceptable to exempt seal products obtained from Inuit hunts and resource management-related culls from a prohibition on the sale of seal products.171 Finally, the responses of the surveyed companies did not really rebut the specific claim proposed by the complainants.172 Therefore, the Panel did not place much weight on the results of the public surveys. 164 Id. [7.337]. See Roger Alford, Morality Play at the WTO, Opinio Juris, Dec. 5, 2013, available at http://opiniojuris.org/2013/12/05/morality-play-wto/ (last visited May 8, 2017). 166 See also Joost Pauwelyn, The Public Morals Exception after Seals: How to Keep It in Check? International Economic Law and Policy Blog, May 27, 2014, available at http://worldtradelaw.typepad.com/ ielpblog/2014/05/the-public-morals-exception-after-seals-how-to-keep-it-in-check.html (last visited May 9, 2017). 167 Robert Howse, Comments, International Economic Law and Policy Blog, May 27, 2014, available at http://worldtradelaw.typepad.com/ielpblog/2014/05/the-public-morals-exception-after-seals-how-to-keep-it-in -check.html (last visited May 16, 2017). 168 See EC-Seal Products: First Written Submission by the European Union, fn. 14[194]. 169 See EC-Seal Products: Reports of the Panel, fn. 5[7.398]. 170 See EC-Seal Products: Reports of the Panel, fn. 5 at 119. 171 Id. 172 Id. 165 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 109 Apart from the problems pointed out by the Panel, the results of the surveys conducted by the EU did not reveal a key issue in support of the existence of a moral concern for animal/seal welfare, namely the standard of right and wrong conduct. Although the surveys did prove that a majority of the interviewees supported the EU Seal Regime,173 they did not demonstrate whether the concern for seal welfare reflects a standard of right and wrong conduct in their minds.174 To put it differently, would they really refuse to buy a certain type of seal products only because it was wrong, as these interviewees maintained, to adopt inhumane methods of killing to produce the product? Would they voluntarily pay for seal products obtained from seals killed humanely, at higher prices, as they considered it morally right to do so? As rational adults, only few people would really say “yes” to the inhumane killing of animals. Nevertheless, it is one thing to show your attitude in response to a question asking for an opinion, but another thing to really translate this attitude into practice. In this regard, Canada challenged this regime, as it did not provide information to consumers about the provenance of seal products that could legally be sold in the EU, not even about the presence of such products.175 The EU could not argue that inhumane killing was against their moral concerns if their consumers were not even aware of the existence of such killing methods. 4. Scientific Evidence. — Some moral concerns can be explained by scientific reasons. For instance, the EU submitted scientific evidence including scientific reports and killing methods recommended by various veterinary experts.176 Scientific evidence can illustrate the background of and rationale underlying the moral concerns, but it is not evidence of the existence of the moral concerns themselves. After all, this is not under the context of Article XX(b) or Article XX(g) of the GATT, where scientific assessment is necessary to establish the necessity for certain measures “to protect human, animal or plant life or health” or “relating to the conservation of exhaustible natural resources.” What matters while invoking Article XX(a) of the GATT is the presence of a moral belief that a certain kind of conduct constitutes a standard of right and wrong conduct in society. 5. Religious or Moral Origins of the Measures Concerned. — As mentioned above, there are countries where pure religious or moral beliefs are widely held by an overwhelming majority of people.177 In such situations, it is necessary to examine the 173 See EC-Seal Products: First Written Submission by the European Union, fn. 14[194]. See also WTO, European Communities — Measures Prohibiting the Importation and Marketing of Seal Products Reports of the Panel, Addendum, Annex B-1 (Nov. 25, 2013) WT/DS400/R/Add.1 and WT/DS401/R/Add.1 [59]. 175 See Introduction; see EC-Seal Products: First Written Submission by Canada, fn. 9[236]. 176 See EC-Seal Products: First Written Submission by the European Union, fn. 14[77]–[169]. 177 See Part III Section A.2. 174 110 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 religious or moral origins of the relevant measures.178 Regardless of the form of evidence that the contracting parties may choose, they have to demonstrate that the moral concern at issue is widespread and deeply-rooted among the citizens in that country or area. In the EC-Seal Products dispute, although both the Panel and the Appellate Body did not shed light on this point, Canada challenged the importance of the EU’s moral concern on animal welfare, as the evidence submitted by the EU disclosed that the views of their citizens were not rooted in any knowledge of the seal hunts or the seal industry.179 F. Integrating Human Rights Law with Trade Law In human rights law, the term “public morals” also frequently appears as an exception clause for governments to limit the full enjoyment of the relevant rights of their citizens.180 Notably, there have been plenty of case laws before different human rights tribunals addressing the reasonable use of this exception clause. Therefore, it would be helpful to integrate human rights law with trade law in respect to the interpretation and implementation of the “public morals” exception. 1. The Definition of “Public Morals” in Human Rights Law. — As mentioned above, the WTO DSB has defined “public morals” as “standards of right and wrong conduct” in the US-Gambling dispute,181 with the Panel in the EC-Seal Products dispute citing this definition, considering it as “equally applicable” in the case at hand.182 Referring to the Panel report in the US-Gambling dispute, we can see that its determination was based on the definition of “public” and “moral” in the Shorter Oxford English Dictionary and the clarifications in footnote 5 of the GATS.183 Afterwards, the Panel in the EC-Seal Products dispute did not add any further explanations. This method of interpretation seems too simple and mechanical, especially the reference to the dictionary. Although the Appellate Body has acknowledged that dictionaries are not dispositive statements of the definition of a word but only a “useful starting point” for the analysis of the “ordinary meaning” of a treaty term based on Article 31 of the Vienna 178 See Simon Lester, Evidence of Public Morals, International Economic Law and Policy Blog, May 27, 2014, available at http://worldtradelaw.typepad.com/ielpblog/2013/08/evidence-of-public-morals.html (last visited May 10, 2017). 179 See Addendum, Annex B-1, fn. 174[59]. 180 Office of the United Nations High Commissioner for Human Rights (UNCHR), Human Rights and World Trade Agreements (New York and Geneva 2005) HR/PUB/05/5, 9–10. 181 See Part II Section A. 182 See EC-Seal Products: Reports of the Panel, fn. 5[7.380]–[7.382]. 183 See US-Gambling: Report of the Panel, fn. 70[6.463]–[6.467]. The footnote 5 in the GATS reads as follows: “The public order exception may be invoked only where a genuine and sufficiently serious threat is posed to one of the fundamental interests of society.” 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 111 Convention on the Law of Treaties (VCLT),184 it still relies on dictionaries in a great detail.185 In the US-Gambling dispute where the term “public morals” was defined, the dictionary was almost the main source that the Panel relied on.186 Rather than placing heavy weight on dictionary definitions, the WTO DSB should develop the treaty terms more in line with other sources of public international law.187 This is also a requirement underlined in Article 3.2 of the DSU and Article 31(3)(c) of the VCLT. The Appellate Body has also acknowledged in the US-Gasoline dispute that the GATT cannot be read in clinical isolation from public international law.188 As for the definition of the term “public morals” under Article XX(a) of the GATT, the WTO DSB is advised to shed more light on the interpretation of this term in the context of human rights law.189 Meanwhile, as indicated above, the moral standards in human rights law may also be included in Article XX(a) of the GATT, especially jus cogens norms.190 2. The Doctrine of the Margin of Appreciation. — In determining the scope of “public morals,” the WTO Panel held that the contracting parties have a certain degree of discretion. 191 Similarly, the state parties to human rights treaties also enjoy such discretion while defining the scope of public morals. Of particular note is the doctrine of the margin of appreciation as developed by the European Court of Human Rights (ECtHR). In the Handyside case, the ECtHR ruled that since the view toward certain morals varies from time to time and from place to place, it is better for national authorities to decide the scope and the requirements of the morals at issue. 192 184 WTO, United States — Continued Dumping and Subsidy Offset Act of 2000 (US-Offset Act): Report of the Appellate Body (Jan. 16, 2003) WT/DS217/AB/R and WT/DS234/AB/R [248]; WTO, United States — Measures Affecting the Cross-Border Supply of Gambling and Betting Services (US-Gambling): Report of the Appellate Body (Apr. 7, 2005) WT/DS285/AB/R [164] and note 191; WTO, European Communities — Customs Classification of Frozen Boneless Chicken Cuts (EC-Chicken Cuts): Report of the Appellate Body (Sep. 12, 2005) WT/DS269/AB/R and WT/DS286/AB/R, [175]–[176]. 185 Isabelle Van Damme, Article 31 of the VCLT and “Textualism,” Opinio Juris, Mar. 2, 2009, available at http://opiniojuris.org/2009/03/02/6904/ (last visited May 15, 2017). 186 In US-Gambling, the Panel determined the definitions of both “public” and “morals” based on dictionary meanings. Recalling that footnote 5 of the GATS was simply an additional explanation, the Panel only gave a direct citation of this footnote with no further assessment and then drew a conclusion on this question. See US-Gambling: Report of the Panel, fn. 70[6.463]–[6.467]. 187 See also Christian Häberli, Seals and the Need for More Deference to Vienna by WTO Adjudicators (2014), World Trade Institute, University of Bern, Working Papers, 6, available at http://ssrn.com/link/SIEL2014-Bern-Conference.html (last visited May 13, 2017); Sarah H. Cleveland, Human Rights Sanctions and International Trade: A Theory of Compatibility, 5 Journal of International Economic Law, 149 (2002). 188 See US-Gasoline: Report of the Appellate Body, fn. 21 at 17. 189 See also Charnovitz, fn. 92 at 742. 190 See Part III Section C. 191 See EC-Seal Products: Reports of the Panel, fn. 5[7.381]. 192 Case of Handyside v. the United Kingdom (1976) 1 EHRR 737 [48]. 112 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 Accordingly, states enjoy a margin of appreciation in assessing the necessity of the measures taken to protect their moral concerns.193 This decision offered a systematic elaboration of the Strasbourg organs’ well-known doctrine, especially the “public morals” exception. The ECtHR has never provided a definition for this doctrine. In general, it is defined by scholars as “the discretion that a judicial body (in this case the ECtHR) acknowledges the member states have in assessing the prerequisites to apply certain measures.”194 It is a “grant of ‘breathing space’ or ‘elbow room’ by international authorities to national authorities.”195 While reviewing the necessity of the measures to protect public morals based on the doctrine of the margin of appreciation, one must bear in mind the difference between the establishment of facts and the determination of questions of law. While analyzing this doctrine in the context of the European Convention on Human Rights, van Dijk and van Hoof pointed out that the assessment whether the facts, that is, the measures at issue constitute a violation of the Convention can only be decided by the Strasbourg organs,196 whereas the establishment of the facts, especially the relevant national law and its interpretation should be carried out by national authorities.197 This can contribute to judicial expediency and efficiency of the fact-finding process and the evaluation of evidence by an international organ.198 Therefore, while assessing the scope of a certain moral concern in the context of Article XX(a) of the GATT, the contracting parties may also enjoy a margin of appreciation to decide “whether, in their societies, concrete situations and forms of conduct clash with public morals.”199 However, it has to be emphasized that the parties’ discretion can only be extended to examining whether specific facts, that is, the import or export of certain goods is in conflict with a moral concern in their society.200 As for the definition of the term “public morals” in the GATT and whether the measures in question violate the GATT, the WTO DSB shall have the competence to decide.201 193 Id. Perrone, fn. 137 at 363. 195 Howard Charles Yourow, The Margin of Appreciation Doctrine in the Dynamics of European Human Rights Jurisprudence, 3 Connecticut Journal of International Law, 118 (1987–1988). 196 Pieter van Dijk & Godefridus JH van Hoof, Theory and Practice of the European Convention on Human Rights (2nd edition), Kluwer Law and Taxation, at 446–448 (1990). 197 Id. 198 Yutaka Arai-Takahashi, The Margin of Appreciation Doctrine and the Principle of Proportionality in the Jurisprudence of the ECHR (1st edition), Intersentia, at 239 (2002). 199 See Perrone, fn. 137 at 366. 200 Id. 201 Id. 194 2019] THE BALANCE BETWEEN “PUBLIC MORALS” AND TRADE LIBERALIZATION 113 CONCLUSION In contemporary society, a growing number of non-trade factors influence trade issues. The “public morals” clause in Article XX(a) of the GATT, though rarely discussed during the preparation of the GATT, continues to play an increasingly important role in balancing trade liberalization and the protection of the contracting parties’ sovereignty over domestic moral issues. The EC-Seal Products dispute was the first case where the DSB discussed “public morals” as a distinct basis for trade measures inconsistent with the requirements in the GATT. In this case, the Panel cited the definition of “public morals” in the GATS given by the Panel in the US-Gambling dispute, which was “standards of right and wrong conduct maintained by or on behalf of a community or nation.” Moreover, since the scope of public morals varies from time to time and from space to space, it should be the national authorities that decide the scope of their moral concerns rather than the WTO DSB. Based on the EC-Seal Products dispute, the Appellate Body in the Columbia-Textiles dispute developed a more comprehensive understanding of the application of Article XX(a), namely a two-tier analysis to establish the justification of a GATT-inconsistent measure under Article XX(a). This analysis method was then followed by the Panel in the Brazil-Taxation dispute. An interesting point in the EC-Seal Products dispute is that for the sake of flexibility, the Appellate Body rejected Canada’s and Norway’s contentions, and stated that there was no need to set up a pre-determined threshold in respect of any particular factor.202 However, in my opinion, there should be a pre-determined threshold while balancing each factor rather than setting up different standards of these factors in different cases. Pre-determined thresholds contribute to the predictability of Article XX(a) of the GATT and can prevent the abuse of this clause. In the Columbia-Textiles dispute, the Appellate Body has standardized the necessity test. This set a solid example for latter cases, and made the application of Article XX(a) clearer, while reducing the chances of abuse. Additionally, a thorough examination of evidence, focusing on whether the moral problem at issue constitutes a deeply-rooted and widespread concern in the society in question, is also conducive to the prevention of abuse of Article XX(a) of the GATT. Moreover, considering the lack of sufficient case law in the WTO, it would be useful to integrate human rights law and trade law on the “public morals” exception, especially in the context of the definition of this term. The doctrine of the “margin of appreciation” established by the ECtHR is noteworthy in that it would be helpful to decide the scope of the autonomy and discretion of the contracting parties in their application of the “public 202 Id. 114 FRONTIERS OF LAW IN CHINA [Vol. 14: 86 morals” exception. In establishing these facts, states can enjoy a margin of appreciation while assessing the scope of their moral concerns, that is, whether a certain conduct is consistent with their domestic morals. However, while determining whether the measures protecting the moral concerns violate Article XX(a), the WTO DSB should make the final decision. In conclusion, by granting contracting parties discretion in deciding the scope of their moral concerns while conducting a comprehensive and thorough examination for the necessity test in the meantime, as well as making use of the chapeau under Article XX of the GATT, a balance can be struck between trade liberalization and public moral issues.