Volume 42 | Number 3 Summer 2007
VII. Conclusion
The WTO is a developing legal system. More than ten years after its creation, many of its provisions and underlying concepts are constantly being refined by jurisprudence and scholarly writing. This process is frequently accompanied and influenced by comparative legal thinking. A comparative view, which is also the basis of this article, may contribute to clarifying uncertainties and providing some input into the thinking about WTO law. Conversely, an overly simplistic transplantation of legal concepts from one legal order to another is not what this process should be about. This would lead to misunderstandings and confusion, and it would be perceived as illegitimate. A more fruitful approach is to reflect on concepts that have developed over decades in other legal systems and to benefit from the core elements of those concepts when analysing WTO law.
One of the most important challenges for WTO law is the balancing of competing rights, principles, values, or interests. The perceived juxtaposition of free trade and non-trade interests is one fundamental expression of this concern. Another concern is whether the WTO judicial bodies should do balancing at all or better leave that to national institutions. Legally, balancing in the WTO requires constant (re-)interpretation of specific provisions of the WTO Agreements which lay down the criteria to shall be taken into account by the WTO Members.
The increasing demand for authoritative and sensitive balancing is a major challenge for judicial bodies that have to cope with concrete disputes. Difficult practical questions relate to the scope of WTO law, the interaction with other legal regimes, the precise meaning of open-ended provisions, or the importance of noneconomic values and interests in WTO law. Such a process requires appropriate and legitimate legal instruments for the judiciary to work with.
Some dispute that there is, or that there should be, adjudication of competing values in the WTO. Others may want to cloud the issue for a variety of reasons. Judges, for instance, may favor tests, so as to avoid “the impression that there is any need to adjudicate competing values at all.”304 In analyzing the jurisprudence and disputes, which appear rather technical at first glance, one finds many instances where such a balancing of rights, principles, values, and interests is actually taking place and can hardly be avoided.
The main concern is how to undertake balancing within the WTO legal system. This includes the definition of the standards and tests against which this balancing may take place. Most prominent are the concepts of necessity, reasonableness, and proportionality.
In our chapter on legal principles, we have concluded that one of the main characteristics of principles is the idea of optimization. Principles command that they be realized to the highest extent possible, and they do not apply in an all-or-nothing fashion. In case of a conflict, two principles do not strike each other out, as is the case with rules. Both principles generally remain valid and need to be balanced against each other. One insight from this theoretical approach is to recognize that in legal orders, which lack a clear hierarchy of norms and which contain many open-ended provisions, conflicts will often be resolved through a balancing of conflicting principles. In fact, the very nature of the existence of legal principles and open-ended provisions makes balancing unavoidable. The relationship between the different values and principles laid down in the WTO Agreements is thus relative, depending on the facts of the case and the different interests at stake. Substantive tests may help structure and rationalize this process, aiming to find an equilibrium between different competing objectives.
The increasing maturity of the WTO legal system has been analyzed against the background of its “constitutionalization.” One particular aspect of this process is the so-called “judicial norm-generation,” whereby constitutional-type principles and techniques are generated through the WTO jurisprudence.305 Deborah Cass explicitly mentions the principle of proportionality, rational relationship testing, and less restrictive means. It is necessary to have an open debate about the normative content and implications of these principles in WTO law.
Balancing within the WTO legal system can take place at two different levels. First, at the national level, domestic authorities are in many instances required by WTO law to take into account and weigh competing interests as part of their domestic decision-making process. Additionally, the domestic decision-making process must be transparent, open, and unbiased. This can be considered as the procedural aspect of substantive tests imposed by WTO law. Second, balancing also takes place at the WTO level, in particular in the dispute settlement proceedings. Whenever a dispute arises, the judicial bodies, applying the specific provisions of the WTO Agreements, will have to balance competing factors. This balancing process is structured and mediated by the standards and tests discussed in this paper.
Balancing is incorporated in many specific WTO provisions. Article XX GATT, for instance, consists of different steps of analysis, relating both to the design and application of domestic measures. While there is no overall balancing of competing values, the different steps of analysis within Article XX GATT each require a concrete evaluation and balancing of specific rights and interests at issue. One important function of the tests in Article XX GATT is to structure and rationalize the assessment of domestic measures. The same holds true for the SPS and TBT Agreements.
The principle of proportionality plays an important role in many national and international jurisdictions. It is both a doctrine for the legislature and for the administration to follow and a standard applied by the judiciary when reviewing the acts of public authorities. Its normative content, including the intensity of review, may vary, but the core of any proportionality analysis remains the same. The basic idea is to limit discretion exercised by public authorities in a democratic society and to balance competing interests. Proportionality is a key principle in determining the relationship between different actors, including states vs. individuals (in domestic law), federal level vs. state level (in federal systems), and States vs. States (in international law). More specifically, the principle of proportionality is recognized in some systems as a general test for the exercise of free discretion. It is also used to review justifications for interference with, or restrictions on, rights. Other tests, such as necessity or reasonableness, may equally includes elements of proportionality without disclosing this factor.
Proportionality analysis is closely linked to the concepts of intensity or standard of review. The experience in other legal systems has shown that intensity of review is one specific aspect of the principle of proportionality and relates to its procedural dimension (as opposed to the normative content—the substantive dimension). We therefore advocate a comprehensive assessment of the review power exercised by judges, taking into account the interwoven aspects of proportionality and intensity (or standard) of review. One can attempt to clarify these concepts by separating the procedural from the substantive aspects of judicial review and, at the same time, by outlining their interrelationship.
In the WTO, proportionality is not mentioned as such in the individual Agreements and has not been explicitly recognized as a general principle. Our basic argument is that proportionality, though not recognized as such, underpins and inspires many of the specific rules laid down in the WTO Agreements.
We can identify at least two possible ways how the principle of proportionality could apply in WTO law. First, proportionality as a principle of general international law may inform the interpretation of specific provisions of the WTO Agreements. Second, proportionality may be a specific obligation within the WTO Agreements, having been laid down in provisions such as Article XX GATT and similar provisions in the SPS and TBT Agreements. Those provisions often require balancing and the reliance on some sort of proportionality theory to define the specific obligations incumbent on the WTO Members.
Tests like necessity, reasonableness, and proportionality are not standardized and may well lead to confusion, given that they are applied in many different legal regimes. For instance, the concept of necessity is often mentioned in the WTO Agreements as well as in other legal systems. In the traditional reading of the principle of proportionality, necessity is the second step of analysis. It does not (explicitly) include a weighing and balancing of the advantages and negative impacts of a measure. Alternatively, the use of the concept of necessity in the context of UK human rights law stands for—and includes—a fuller proportionality analysis. Public international law also includes some balancing of rights and interests to refine the concept of necessity. Within the scope of Article XX GATT, necessity is equally not restricted to a simple assessment of the least trade-restrictiveness of a domestic measure. The determination whether a trade-restrictive measure is necessary to pursue a legitimate public policy objective will be made upon a balancing of different factors as elaborated in the jurisprudence.
What can be the possible consequences of a more coherent proportionality theory applied by the WTO judiciary? First, it imposes an obligation on Members to justify their measures according to a relatively structured legal criterion. It further makes the judicial process more rational, coherent, and predictable. One effect is to limit the discretion of judges by requiring them to follow a sequence of steps in analyzing domestic measures. Through the three-step analysis, a structured deliberative process may take place, within which judges play a predominant role. The procedural aspect of proportionality, both in its application by domestic authorities and by the WTO judiciary, involves a “structured weighing of interests.”306 This includes the fact that all interested parties may articulate their views, which subsequently need to be taken into account in the balancing process. In that sense, the principle of proportionality may pose less of a danger to WTO Members pursuing legitimate policy choices than some other, vaguely defined tests.
One counterargument against proportionality (and balancing) in the WTO context is that it often provides judges with too great a power to examine legitimate domestic measure and to interfere with sovereign policy choices. Balancing by the judiciary may promote vagueness and leave the courts a “permanent loophole,” maximizing their freedom of action.307 Our argument is different. The more structured and rational a test, the more the courts will have to engage in a transparent judicial discourse with regard to trade-offs they are constantly required to make. Such discourse needs to take the arguments advanced by the parties more seriously. As the experience in other legal systems shows, this is no guarantee for elaborate and sophisticated judgments. Yet, it may contribute to reducing the vagueness and unpredictability of judicial reasoning in the WTO.
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Footnotes
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