The core legal principles laid down in the GATT are still considered to be the crucial legal benchmark for NTBs.²² They comprise the prohibition of quantitative restrictions pursuant to Article XI GATT and the principle of non-discrimination contained in Article I:1 GATT (the most-favoured nation obligation) and Article III:4 GATT (national treatment obligation). Contrary to the absolute prohibition of quantitative restrictions, the principle of non-discrimination establishes only a relative standard of protection. It prohibits discriminatory treatment of third countries’ imported products vis-à-vis foreign and domestic “like” products. Accordingly, the principle applies only in relation to “like” products. In practice, it is often crucial to the legality of a trade restrictive measure whether there exists a like product to which the most-favoured nation or the national treatment obligations can apply. In terms of a precise definition of likeness, the WTO texts provide no guidance. However, the WTO adjudicating bodies, i.e. the panels and the Appellate Body have established four criteria for assessing the likeness of products: (1) the properties, nature and quality of the products; (2) the end use of the products; (3) consumers’ tastes and habits in respect of the products; and (4) the tariff classification of the products.²³

Even where a NTB discriminates between like products or imposes quantitative restrictions, this does not mean that the NTB is incompatible with the GATT. Article XX GATT entitles WTO Members to pursue certain policies which have a trade-restrictive effect, provided that they are “not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination”.²⁴ In the context of NTBs, WTO Members most often rely on Article XX(b) and (g) GATT, according to which measures may be upheld that are necessary to protect human, animal or plant life or health or that relate to the conservation of exhaustible natural resources, respectively.²⁵ The existing case law shows that the standard which NTBs must meet in order to fall within the scope of these justifications is rather high and only rarely met.

The TBT Agreement supplements the GATT provisions with regard to technical regulations, standards and conformity assessment procedures.²⁶ A technical regulation is defined as a document stipulating product characteristics or their related processes and production methods (PPMs), compliance with which is mandatory.²⁷ In terms of its principal structure, the TBT Agreement is similar to the GATT. Article 2.1 of the TBT Agreement contains the most-favoured nation and the national treatment obligations, while the subsequent provisions entitle WTO Members to enact technical regulations implementing their public policies, provided that such technical regulations are not prepared, adopted, or applied in a manner that creates unnecessary obstacles to international trade. Furthermore, the restraint of trade caused by a technical regulation shall not exceed the extent reasonably necessary to achieve the legitimate objective pursued, such as the protection of human health or safety, animal or plant life or health, or the environment.²⁸ In addition, WTO Members are required to carry out an assessment of the risks that are likely to result if the legitimate objectives were not achieved.²⁹ In that respect, the TBT Agreement builds on Article XX GATT and provides to some extent more precise rules than the latter.³⁰ However, the exact relationship between the TBT Agreement and the GATT is not clear.³¹ In Korea – Dairy, the Appellate Body held that the WTO Agreement is a “Single Undertaking” and therefore “all WTO obligations are generally cumulative and Members must comply with all of them simultaneously”.³² In EC – Asbestos, it held that “the TBT Agreement imposes obligations on Members that seem to be different from, and additional to, the obligations imposed on Members under the GATT”.³³ EC – Sardines confirms this approach. In this case, the Appellate Body made it clear that while “two agreements [can] apply simultaneously […] a panel should normally consider the more specific agreement before the more general agreement”.³⁴

The SPS Agreement contains specific regulations regarding sanitary and phytosanitary measures (SPS measures), which are measures to protect life or health of animal, plant or human from pertinent SPS risks.³⁵ Unlike the GATT or TBT Agreement, the SPS Agreement does not impose a non-discrimination obligation based on like products. Instead, it requires the WTO Members to abstain from discrimination where “identical or similar conditions” exist.³⁶ Yet, the SPS Agreement permits discrimination even in this case, provided that the SPS measure is necessary to protect human, animal or plant life or health and is based on scientific principles and evidence.³⁷ Particularly the latter requirement has the effect that the SPS Agreement is narrower than the TBT Agreement³⁸ since subjective, non-scientific factors, e.g. cultural/moral preferences or consumer tastes, do not suffice as a justification for trade restrictive measures.³⁹ Once the requirements of the SPS Agreement are met, the SPS measure shall be presumed to be in accordance with the GATT, especially the provisions of Article XX(b) GATT.⁴⁰

The relationship between the SPS and the TBT Agreement is specified in Article 1.5 of the latter. In accordance with this provision, the TBT Agreement shall not apply to SPS measures. Accordingly, where an SPS measure has been identified, it is exclusively subject to the SPS Agreement, if even it has been implemented in the form of a technical regulation.⁴¹

The EC – Asbestos ⁴³ case between the European Communities (EC) and Canada⁴⁴ arose from a French decree prohibiting the production, marketing, importation and exportation of asbestos and all goods containing asbestos for public health reasons.⁴⁵ In 1998, Canada (the world’s second largest asbestos manufacturer at that time)⁴⁶ requested consultations with the EC maintaining that the French decree was in violation of Articles 2 and 5 SPS Agreement, Article 2 TBT Agreement and Articles III, XI and XIII GATT.⁴⁷ The Panel concluded that the French decree was inconsistent with the national treatment obligation laid down in Article III:4 GATT.⁴⁸ The Panel then examined whether the EC could rightly invoke Article XX(b) GATT as a justification for its asbestos ban. In this respect, Canada and the EC essentially disagreed on whether a certain asbestos product posed a human health risk.⁴⁹ According to the Panel this was a matter of sufficient scientific evidence. In the particular case, the Panel found that the EC had established a prima facie case of a human health risk and that Canada had not presented sufficient evidence to rebut this finding.⁵⁰ Because there was no alternative measure available to the EC which could fulfil the human health protection objective, the Panel considered the asbestos ban to be justified under Article XX(b) GATT.⁵¹ With regard to the TBT Agreement, the Panel held that it did not apply to the asbestos ban but to the exceptions of that ban, because only the latter constituted a technical regulation.⁵² However, since Canada did not challenge these exceptions, the Panel did not examine them.

On appeal, the Appellate Body held that the ban by the French decree was a “technical regulation”, as defined in Annex 1.1 of the TBT Agreement, and thus covered by the TBT Agreement.⁵³ It did not, however, make any more substantive findings because of the insufficiency of the facts.⁵⁴ With regard to the GATT, the Appellate Body reversed the Panel’s finding that the products were “like” and the measures therefore inconsistent with Article III:4 GATT.⁵⁵ According to the Appellate Body, Canada failed to show that a competitive relationship⁵⁶ between the products and the like products existed.⁵⁷ Finally, the Appellate Body confirmed the Panel’s view that in any case the ban was justified under Article XX (b) GATT, because it “protect[ed] human life or health” and “no reasonably alternative measure” existed.⁵⁸ Especially, a “controlled use” would not be a conceivable alternative.⁵⁹

EC – Hormones—a dispute between the EC, the US and Canada—concerned an EC prohibition of the sale and import of beef to which certain kinds of natural or synthetic hormones had been administered for growth purposes. As a result, US farmers suffered extensive export shortfalls. The US successfully challenged the measures as being inconsistent with, inter alia, the SPS Agreement.

With regard to the requirements for a justification of an SPS measure, the Appellate Body emphasised that the right of a WTO Member to define its appropriate level of protection is not absolute and must be backed by a substantive scientific justification when exceeding international standards of protection.⁶⁰ Accordingly, the WTO Members do not enjoy unfettered discretion when deciding on their level of SPS protection.⁶¹ Instead, a “rational relationship” between the measure and the empirical risk assessment conducted by the WTO Member concerned must exist.⁶² Against this background, the EC could not defend its hormones ban before the Panel and the Appellate Body. It was not based on any risk assessment as prescribed by Article 5.1 SPS Agreement, nor did it conform to international standards as laid down in Article 3.1 SPS Agreement. After the decision of the Appellate Body, the EC refused to implement the decision.⁶³ New disputes arose on the state of implementation of the decision and retaliatory measures imposed to enforce implementation.⁶⁴

EC – Asbestos and EC – Hormones are but the very top of a long list of transatlantic disputes on NTBs. Overall this case law on NTBs gives rise to two major observations. First, it is very difficult to meet the standard required for a justification of NTBs under the GATT, the SPS or the TBT Agreement. The only instance where an NTB fully complied with WTO law was EC – Asbestos, where it was obvious that there existed no alternative measure to the introduction of an import ban on asbestos. The Appellate Body held, that “France could not reasonably be expected to employ any alternative measure if that measure would involve a continuation of the very risk that the Decree seeks to ‘halt’. Such an alternative measure would, in effect, prevent France from achieving its chosen level of health protection.”⁶⁵

Second, the case law illustrates that a risk assessment and reliable scientific evidence of an actual positive effect of the NTB is absolutely key to its justification under WTO law. All parties concerned, the EU, the US, and Canada have already learned that poor evidence, an overly narrow assessment of the risks, and lack of even-handedness of the NTB in view of the general standard of protection within the regulating Member puts the WTO consistency of an NTB at risk. Thus, it is important to prepare the introduction of a new NTB very carefully in order to avoid the unnecessary and unpleasant exercise of redrafting an NTB according to the rulings of a WTO panel.