Ongoing disputes at the WTO · Recent Updates · Trade and Environment

Fate sealed?: Analysis of the Seal Products case – Part I

Recently, the WTO dispute regarding EU’s regime regarding the trade of seal products has resulted in plenty of insightful debates. The Appellate Body report came out a few days back and trade law experts like Simon Lester and Rob Howse have chipped in extensively.
I’ll be taking on a few aspects of the case, as and when more discussion arises.

Background

The seals dispute pits the Canada and Norway against the entire might of the 28 member European Union over the latter’s decision to disallow the placing of seal products on its markets, save in certain exceptional cases.
This initiative was implemented through a series of legislative and administrative instruments which stipulated that the only way in which such products could be traded was if the seal products qualify the following:

1) seal products obtained from seals hunted by certain Indigenous Communities like Inuit (the “IC exception”)
2) seal products obtained from seals hunted for purposes of marine resource management (the “MRM exception”); and
3) seal products brought by travellers into the European Union in limited circumstances (the “Travellers exception”)

In essence, the complaints argued that EU’s measure results in the violation of the non-discriminatory principle found in Articles I:1 and III:4 of the General Agreement on Trade and Tariff (GATT) and certain provisions of the Technical Barriers to Trade (TBT) Agreement. It was also argued that the measure results in the establishment of a numerical quota and thus is violative of Article XI:1 of the GATT.
The main issue (at least for the former provisions) revolved around the fact that the EU system allowed more favourable access to domestic producers (Sweden, Finland) as compared to Canada and Norway. It was further argued that even in the international domain, the complainants have been a victim of discrimination since imports from countries like Greenland were treated more favourably.
The Panel Report came out in November last year and it seems to be the best place to start.

Panel’s Conclusions:

a) Regarding the TBT, the panel made the following rulings

i) That the measure at hand falls within the scope of a “technical regulation” as provided for in Article 2.1 of the Agreement
ii) That it is violative of the main obligation present in Article 2.1 which is basically the principle of non-discrimination
iii) That the violation of Article 2.2 is saved by “public moral concerns” of EU along with the fact that “no reasonably available alternatives have been demonstrated which would make an equal or greater contribution to the fulfilment of the objective”

b) Regarding the GATT, the panel ruled as follows:

i) That the IC exception violates Article I:1 as the same competitive relationship is not provided to Canada and Norway, as has been provided to Greenland
ii) That the MRM exception is violative of Article III which prohibits national regulators from granting advantages to their domestic industries, in terms of trade competitiveness
iii) However, the panel clarified that the measure was not inconsistent with Article XI:1 as it did not result in the establishment of a numerical quota
iv) Finally, it was held that EU’s defence under the general exceptions of Article XX(a) failed due to the lack of a prima facie case and the XX(b) analysis revealed that the “Chapeau test” had not been fulfilled.

And now the Appeals:

Both the complainants and the respondents in the case have decided to appeal against certain facets of law that were present in the Panel’s report. They derive this power from Article 16 and 17 of the DSU and in furtherance of the same, filed a “Notice of Appeal” pursuant to Rule 20 and 21 of the Working Procedure for Appellate Review.

Before going into the finer details of the matter, it bears note that all the parties to the dispute agreed to have the oral hearing in the appellate proceedings open to public observation. This would indeed go a long way in ensuring transparency in the WTO proceedings and is a heartening follow-up to the era of US – Continued Suspension of Obligations.
One must appreciate the fact that process established for oral proceedings is quite complex, as mentioned in the report. It begins with a request (usually from the complainant), followed by sanctioning by the opposing party. The inputs, in the form of comments, are taken from Third Parties and finally a Procedural Ruling is passed.
[ A well researched, albeit slightly old report on the transparency issue in WTO dispute settlement can be found here.]

 

More to come very soon.

 

 

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