Volume 42 | Number 3 Summer 2007
Page 2 of 8
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I. Introduction
Proportionality, necessity and balancing are discussed in the context of the World Trade Organization (WTO). We find these tests at prominent places in the GATS and the GATT, as well as in the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) and the Agreement on Technical Barriers to Trade (TBT Agreement). The meaning of these tests and their interrelationship is not always clear. There is considerable controversy among participants at the diplomatic, policy, treaty-making, or the dispute settlement level, who put different meanings into the different tests and concepts. The discussion among scholars is often influenced by a projection of national meanings and discourses in the WTO and GATS context. The liberalisation of trade in goods and services requires that the meaning of and the relationship between these tests are clarified. In this article we set out a comparative approach for doing so at a general WTO level, but this approach is particularly relevant in the context of the GATS and the liberalisation of trade in services.
In the WTO, as in any other legal and political system, value choices are reflected in the legal order. The fundamental question in this respect is which institution should be competent to make those choices and how this should be done.1 It may be that this is a task for the legislator, the courts, or for both.
In those cases where courts and tribunals review the actions of other bodies, they usually face value choices in many different ways. That applies to the review of legislation and administrative action in domestic law. It also applies to the review of the compliance of states with international law obligations. The legal solutions and techniques for dealing with these issues will often be similar, but there is also considerable variation.
Our focus is on the role of proportionality and balancing in the dispute settlement system of the WTO. Proportionality is a prominent legal principle in many legal orders, and all legal systems have to undertake different forms of balancing, both in determining the content of rules and in their application.2 Proportionality has a major impact at the national level, in federal-type legal systems, and in international law. It also serves to control the discretion exercised by domestic authorities and to limit the interference with, or the restriction of, individual rights of citizens. It is a key legal concept to assist with the trading-off of competing values. These issues also arise in the context of WTO law, particularly in the context of the reconciliation of trade and non-trade issues.
WTO lawyers have discussed the role of the principle of proportionality in the WTO legal order for several years. In 2001, Axel Desmedt published a rather full analysis in an article on proportionality in WTO law, and there have been a considerable number of other publications dealing with the same or related issues.3 Desmedt’s overall conclusion is that there is “not one single overarching (unwritten) proportionality principle in WTO law.”4 Other authors have similarly concluded that there is neither a general proportionality requirement in WTO law, nor has such a general test been applied by the WTO tribunals. The main argument advanced against proportionality is that the WTO is institutionally not ready for such a fundamental balancing of values and interests (mainly economic versus noneconomic), and that such balancing is at the core of the proportionality analysis.5 Marceau and Trachtman point to some additional reasons for skepticism against balancing and proportionality in the WTO:
To many commentators, the idea of balancing tests in contexts where domestic regulation is subject to international scrutiny has been anathema to judicial restraint and national sovereignty . . . . There are two likely reasons. First, balancing tests seem to some to accord too much power to courts. However, it is not unusual for courts to be assigned the task of balancing, explicitly or implicitly, under specified circumstances. . . . Second, balancing tests seem to intervene too greatly in national regulatory autonomy.6
In contrast, Meinhard Hilf has argued in his writing that “the principle of proportionality is one of the more basic principles underlying the multilateral trading system.”7 The author emphasizes that a “sensitive balancing process, guided by the principle of proportionality . . . is needed in which no rule or principle involved should be left to redundancy or inutility. The principle of proportionality should govern any process of interpretation and application of WTO law with a view to obtaining a due relation between the different interests at stake.”8
This disagreement in academic writing is the background against which this article is situated. We attempt to explore whether the disagreement is a matter of semantics or whether it impacts more fundamental issues of the WTO legal order. It could be argued that it does not really matter whether one refers to a particular legal phenomenon as “proportionality” if different terms ultimately bear the same meaning. This is a challenge regularly faced by comparative law scholars, namely that “[a]pparently identical words may have a different meaning and apparently different words may have the same meaning.”9
The fundamental question which we address in this article is how comparative legal thinking about the principle of proportionality and other balancing tests can help explore some of the most challenging questions of WTO law. One core challenge is the balancing of competing values and interests in the WTO. Another challenge is the degree of international constraint imposed on domestic regulation. This leads to the questions of how much deference international organizations and their judicial bodies do show towards sovereign WTO Members, and how much they should show.
Our analysis is informed by insights from domestic constitutional law, legal theory, the law of human rights, European law, public international law, and WTO law. We attempt to provide a conceptual framework to analyze how balancing and proportionality are made to work in the law of the WTO and the dispute settlement process.
Our main conclusion is that there is no crude balancing of trade and non-trade values and interests in the WTO. The tests written into the WTO Agreements provide for a more sophisticated way of balancing, taking account of the individual circumstances at stake, and the competing rights and interests involved. We argue that comparative legal thinking based on insights gained from the principle of proportionality, and the role of principles generally, may help structure and rationalize this process.
In this article, we proceed as follows. In Chapter II, we first discuss the nature of legal principles from a theoretical perspective and how this may influence the thinking about balancing in WTO law. We then discuss the role of principles in public international law and WTO law, providing a background for the subsequent discussion of the principle of proportionality. The latter parts of Chapter II deal with the principle of proportionality in a comparative context. We identify its core functions and elements to carve out its essential characteristics. In Chapter III, we discuss the interaction between the principle of proportionality and the concept of standard (or intensity) of review. We argue that these concepts, which are often treated separately, need to be assessed jointly to gain a fuller understanding of (a) judicial review generally and (b) the principle of proportionality as applied as a test of review. Proportionality is also a core principle in public international law. For this reason, we explore its main characteristics in Chapter IV to assess its possible impact on WTO law. In Chapter V, we explore the necessity and balancing tests of U.S. constitutional law. We then assess the different balancing tests in WTO law in Chapter VI. We focus on the tests under Article XX GATT and in the SPS and TBT Agreements. Our analysis of those tests is informed by the preceding discussion of the main features of the principle of proportionality in different contexts. Finally, we draw some conclusions and offer some suggestions for a better understanding of the balancing undertaken by the judicial bodies of the WTO.