131R

Team: 131R 

5TH GNLU INTERNATIONAL MOOT COURT COMPETITION YEAR - 2012-2013

THE CASE ZWOVKA - ZWOVKA ENVIRONMENT AND SECURITY OF CHILDREN ACT

ENRODA (Complainant)

v.

ZWOVKA (Respondent)

ESPONDENT SUBMISSION OF THE R ESPONDENT

TABLE OF CONTENTS LIST OF ABBREVIATIONS……………………………………………………………………... i

 ix INDEX OF AUTHORITIES………………………………………………………………… ii –  ix STATEMENT OF FACTS………………………………………………………………….. x –  xi  xi MEASURES OF ISSUES………………………………………………………………………. xii SUMMARY OF ARGUMENTS…………………………………………………………… xiii - xv

LEGAL PLEADINGS…………………………………………………………………..… 1 –  25 I. THAT SECTION 2, ENVIRONMENT AND SECURITY OF CHILDREN ACT, 2012 IS CONSISTENT WITH ARTICLE 2.1,

AGREEMENT ON TECHNICAL BARRIERS TO TRADE…………………. 1

1.1 Article 2, Agreement on Technical Barriers to Trade applies to Section 2, Environment and Security of Children Act, 2012………………………………………………………….. 1 1.2 The provisions under the TBT Agreement have to be analysed before the GATT  provisions…………………………………………………………………………………….. 1 1.3 Articles 31-33, VCLT form part of customary rules of interpretation and its principles must be followed followed by the Panel………………………………………………………………. 2 1.3.1 The ordinary meaning of ‘like’ leaves the meaning of ‘like products’ unclear……....... 2 1.3.2 The terms ‘like products’ and ‘less favorable treatment’ in Article 2.1, TBT agreement must be interpreted in the context of the GATT…………………………………………….. 2 1.3.3 The Border Tax Adjustments Report is also relevant for interpreting the term ‘like  products’ under Article 31 (2) (b), VCLT. VCLT. ………………………………………………….. 4 1.2 The toys mentioned in Section 1, ESC Act and the dolls/action figures depicting the folk heroes are not ‘like products’………………………………………………………………. products’………………………………………………………………... .. 5 1.2.1. Ride-on Ride- on toys and dolls have different end uses. ……………………………………... 5 1.2.2. Ride-on Ride-on toys and dolls have different physical physical properties. …………………………. 6 1.2.3. Consumer tastes and habits are significantly different differe nt for the two products. ……….. 6 A. Ride-on Ride-on toys and dolls are popular among different age groups………………… 7 B. Cultural values present in dolls do not exist in ride- on toys……………………... 7 C. Religious restrictions exist for dolls but not for ride-on ride- on toys……………………. 7 D. Harmonised System is not n ot relevant to the ‘like products’ analysis……………… 8 1.3 Arguendo 1.3 Arguendo,, the ride-on ride-on toys have not been accorded a less favourable treatment than ‘like’ domestic products…………………………………………………………………………… 8

1.3.1 Section 2, ESC Act has not been enacted so as to afford  protection to the ‘like’ domestic  products……………………………………………………………………………………… 8 A. Conditions of competitions and regulatory purpose are both necessary to ascertain  protectionist purpose………………………………………………………………… 8 B. The regulatory purpose of the section 2, ESC Act is not protectionist in nature... 10 C. Regulatory distinctions between ride-on toys and dolls do not distort the conditions of competition………………………………………………………………………. 10

II. THAT ARTICLE III:4, GATT IS NOT APPLICABLE TO SECTION 2, ESC ACT………….. 11

2.1 Section 2, ESC Act is affecting ‘importation of products’ and not ‘imported products’ under Article III:4, GATT……………………………………………………….………….. 11

III. THAT ARTICLE XI, GATT IS NOT APPLICABLE TO SECTION 2, ESC ACT…………... 12

3.1 There is a direct conflict between Article XI, GATT and TBT Agreement and hence Section 2, ESC Act should be analysed only under the TBT Agreement…………………... 12 3.2 Arguendo 3.2 Arguendo,, Article 2, TBT Agreement is lex specialis speciali s to Article XI, GATT……….…... 13

IV. THAT SECTION 2, ESC ACT IS CONSISTENT WITH ARTICLE 2.2, TBT AGREEMENT..

14

4.1 Section 2, ESC Act is necessary for the protection of human health and environment………………………………………………………………………………… 14 4.1.1 An analysis of ‘necessary’ includes ‘reasonable alternative’ test and ‘weighing ‘weighing and  balancing’ test………………………………………………………………………………. 14 A. Section 2, ESC Act is necessary for for the protection of human human health……..…….. 15 A1. The contribution of the Section 2, ESC Act to the protection of human health is significant………………………..…………………………………………... 15 A2. The protection of human health is an extremely important value………..... 16 A3. The impact of section 2, ESC Act on the imports from Enroda is not severe…………………………………………………………………………… 16 A4. A ‘reasonable alternative measure’ is not available……………………...... 17 B. Section 2, ESC Act is necessary for the protection of environment…………….. 17 B1. The contribution of the section 2, ESC Act to the protection of environment is significant…………………………………………………………………….... 17 B2. The protection of environment is an extremely important value…………. value …………. 17

B3. The impact of section 2, ESC Act on the imports from Enroda is not severe............................................ severe.................................................................. .............................................. .............................................. .......................... .... 17 B4. A ‘reasonable alternative measure’ is not available……………………...... 18 4.2 The application of section 2, ESC Act does not violate the sixth recital of the Preamble, TBT Agreement………………………………………………………………………….….. 18 4.2.1 Section 2, ESC Act does not create unjustifiable and arbitrary discrimination. ……... 18 4.2.2 Section 2, ESC Act is not a disguised restriction on international trade…………….... 19 4.2.3 There is no duty to negotiate on Zwovka……………………………………………... 19

V. THAT SECTION 3, ESC ACT IS NOT A TECHNICAL REGULATION AND HENCE, IS GOVERNED BY GATT. …………………………………………………………………………………..

20

5.1 Article 2, TBT Agreement does not not apply to section 3, ESC Act……………………… Act……………………… 20 5.2 Section 3, ESC Act is justified under Article XXI, XXI, GATT………………..…………… 20 5.2.1 Article XXI, XX I, GATT is a self judging judging clause…………………………………….……. 20 A. Article XXI, GATT is a self judging clause when interpreted according to Articles 31 and 32, VCLT. ……………………………………………………………...…... 21 B. Article XXI, GATT is a self judging clause when interpreted according to the  jurisprudence available…………………………………………………………........ 21 5.2.2 Arguendo 5.2.2  Arguendo,, Zwovka invoked the security exception under Article XXI, GATT in good faith………………………………………………………………………………………….. 22 A. An ‘essential security interest’ does exist for Zwovka…………………………... 22 A1. An emergency in international relations does exist for z wovka………...…. 23 I.

OAZ is a ‘Terrorist Organisation’………………………………...... 23

II.

Zwovka is under under an obligation to protect its citizens………………. 23

A2. Zwovka has enacted section 3, ESC E SC Act in good faith………………....…. 24 I. Zwovka has relied on objective evidence to reach the conclusion about the threat to its citizens……………………………………………... 24 I.1 The intelligence reports and the checks on the imports by the custom officials establishes the fact that OAZ is targeting the children of Zwovka………………………………………………….………... 24 I.2 Newspaper articles and statesecrets.com cables corroborate the fact that OAZ is targeting the children of Zwovka…………….………... Zwovka…………….………... 25 .............................................................. ............................................ .......................................... .................... xvi EQUEST FOR FINDINGS........................................ R EQUEST

LIST OF ABBREVIATIONS

 ¶

Paragraph

Am. J. Int'l Arb.

American Journal of International Arbitration

Am. U. Int’l. L. Rev.

American University International Law Review

art.

Article

arts.

Articles

B.I.S.D

Basic Instruments and Selected Documents

Ed.

Edition

Eds.

Editors

Et al.

et alia

GATS

General Agreement on Trade in Services

GATT

General Agreement on Tariffs and Trade

I.C.J.

International Court of Justice

ICCPR

International Covenant on Civil and Political Rights

ICSID

International Centre for Settlement of Investment Disputes

Int’l Law Comm’n

International Law Commission

ITO

International Trade Organization

J. World Trade

Journal of World Trade

no.

Number

OAU

Organization of African Unity

SSRN

Social Science Research Network

Supp.

Supplement

U.N. Rep.

United Nation Report

U.N.Doc.

United Nation Document

U.N.T.S.

United Nation Treaty Series

U.S.T.

United State Treaties

UN GA

United Nation General Assembly

UNICEF

United Nations Children's Fund

Utah L. Rev.

Utah Law Review

Vol.

Volume

WTO

World Trade Organization

Y.B. Int’l L. Comm’n

Yearbook of the International Law Commission

i

INDEX OF AUTHORITIES -TREATIES AND CONVENTIONS-

1. Agreement on Technical Barriers to Trade, Apr. 12, 1979, 31 U.S.T. 405, 1868 U.NT.S. 120………………………………………………..……………………..……………...3,13 2. General Agreement on Tariff and Trade, Oct. 30, 1947, 61 Stat. A-11, 55 U.N.T.S. 194…………………………………………………...……..………………...…..…3,12,13 3. International Convention on the Harmonized Commodity Description and Coding System, June 14, 1983, 1503 U.N.T.S. 167…………………………………………….....8 4. International Covenant on Civil and Political Rights art. 6, Dec. 16, 1966, S. Treaty Doc.  No. 95-20, 6 I.L.M. 368 (1967), 999 U.N.T.S. 171……………………………………...23 5. Organization of African Unity Convention on the Prevention and Combating Terrorism art. 1(3), July 14, 1999, 2219 U.N.T.S. 179…………………………………...…………23 6. Understanding on Rules and Procedures Governing the Settlement of Disputes, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, 1869 U.N.T.S. 401…………………………………………….…………...…………………….2 7. Vienna Convention on the Law of Treaties, May 23, 1969, 1155 U.N.T.S. 311…………………………………………………..………………..………………....…2 -UN DOCUMENTS-

1. Convention on the Protection and Promotion of the Diversity of Cultural Expressions art. 1(g), Oct. 20, 2005, 2440 U.N.T.S. 311………………………………………………..….7 2. G.A. Res. S-21/2, ¶ 14, U.N. Doc. A/RES/S-27/2 (Oct. 11, 2002). ……………...…...…..5 3. International Convention for the Suppression on the Financing of Terrorism, G.A. Res. 109, U.N. GAOR, 54th Sess., Supp. No. 49 U.N. Doc A/54/49 (Vol. I) (1999), S. Treaty Doc. No. 106-49 (2000), 39 I.L.M. 270 (2000) (Dec. 9, 1999)…………...……………..24 4. Special Rapporteur,  Addendum - Eighth report on State Responsibility, Int’l Law Comm’n, ¶ 14, U.N. Doc. A/CN.4/318/Add.5 -7 (Feb. 29, June 10 & 19, 1980) (by Roberto Ago)…..................................................................................................................22 5. U.N. Conference on Trade and Employment, Havana, Cuba,  An Informal Summary of the  ITO Charter , U.N. Doc. E/CONF.2/INF.8, at 35 (Nov. 21, 1947)………………………21 6. U NITED  NATIONS ECONOMIC

AND

SOCIAL COUNCIL, SECOND SESSION OF THE

PREPARATORY COMMITTEE OF THE U NITED  NATIONS CONFERENCE O N TRADE A ND EMPLOYMENT, (DRAFT) GENERAL AGREEMENT O N TARIFFS A ND TRADE, E/PC/T/189 (Aug. 30, 1947)................................................... ...........................................................…21 ii

-OTHER LEGISLATIONS-

1. Criminal Code, R.S.C. 1985, c. C- 46, (Can.)…………………………………………….23 2. Terrorism Act 2000, (Eng.)…………………………….………………………………..23 -APPELLATE BODY REPORTS-

1. Appellate Body Report,  Brazil  –   Measures Affecting Imports Of Retreaded Tyres, WT/DS332/AB/R (Dec. 3, 2007)………………………………………….………16,17,18 2. Appellate Body Report, Canada - Certain Measures Concerning Periodicals, 18, WT/DS31/AB/R (July 30, 1997)…………………………………………………………..3 3. Appellate Body Report , Chile  –   Taxes on Alcoholic Beverages, WT/DS87/AB/R, WT/DS110/AB/R (Jan. 12, 2000). ……………………………………………..…………9 4. Appellate Body Report,  Dominican Republic  –   Measures Affecting the Importation and  Internal Sale of Cigarettes, WT/DS302/AB/R (May 19, 2005);……………………….…9 5. Appellate Body Report,  E.C.  –   Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, Jan. 16, 1998………............................13 6. Appellate Body Report,  European Communities  –   Trade Description of Sardines, WT/DS231/AB/R (Sept. 26, 2002)…………………..……………………………………1 7. Appellate Body Report,  European Communities-  Measures Affecting Asbestos and  Asbestos-Containing Products, WT/DS135/AB/R (Mar. 12, 2001)...…...…1,3,4,5,6,15,16 8. Appellate Body Report, Guatemala  –   Anti Dumping Investigation regarding Portland Cement from Mexico,WT/DS60/AB/R (Nov. 2, 1998)……………………….............….12 9. Appellate Body Report,  Japan - Taxes on Alcoholic Beverages, 10, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R (Nov. 1, 1996)……………………...…………..2,3,4,9 10. Appellate Body Report,  Korea  –   Measures Affecting Imports of Fresh, Chilled and  Frozen Beef , WT/DS161/AB/R (Jan 10, 2001)…………………….……………….3,15,16 11. Appellate Body Report, Thailand –  Customs and Fiscal Measures on Cigarettes from the  Philippines, WT/DS371/AB/R (July 15, 2011) ……………………………..............……10 12. Appellate Body Report, United States  –   Import Measures on Certain Products from the  European Communities, WT/DS165/AB/R (Dec. 11, 2000)………...………………..…25 13. Appellate Body Report, United States - Import Prohibition of Certain Shrimp and Shrimp  Products, WT/DS58/AB/R (Oct. 12, 1998)……………………………………...…...….17 14. Appellate Body Report, United States –   Measures Affecting The Cross-Border Supply Of Gambling And Betting Services, WT/DS4/AB/R (Apr. 7, 2005)……………..............17,18

iii

15. Appellate Body Report, United States  –   Standards for Reformulated and Conventional Gasoline, 17, WT/DS2/AB/R (Apr. 29, 1996)…………………………………....2,4,13,18 16. Appellate Body Report,  United States-Measures Affecting the Production and Sale of Clove Cigarettes, WT/DS406/AB/R (Apr 4, 2012)……………………...……………3,5,6 -PANEL R EPORT-

1. Panel Report,  Brazil  –   Measures Affecting Imports Of Retreaded Tyres,  WT/DS332/R, June 12, 2007……………………………………………………………………………..19 2. Panel Report, Canada - Certain Measures Concerning Periodicals, WT/DS31/R (March 14, 1997) …………………………………………………………………………...…..9,13 3. Panel Report,  European Communities  –   Regime for the Importation, Sale and  Distribution of Bananas: Recourse to Art. 21.5 by Ecuador , WT/DS27/RW/EUC (May 22, 1997)...............................................................................................................................9 4. Panel Report,  European Communities  –   Regime for the Importation, Sale and  Distribution of Bananas, WT/DS27/R/GTM, WT/DS27/R/HND (May 22, 1997)..…….12 5. Panel Report,  European Communities-  Measures Affecting Asbestos and AsbestosContaining Products, WT/DS135/AB/R (Sep. 18, 2000)…………………..………8,11,12 6. Panel Report, European Communities –  Trade Description of Sardines, WT/DS231/AB/R (May 29, 2002)…………………………………………………………………..……..….2 7. Panel Report,  Indonesia  –   Certain Measures Affecting the Automobile Industry, WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R (July 2, 1998)…………………..12 8. Panel Report,  Australia  –  Subsidies Provided To

Producers And Exporters Of

 Automotive Leather , WT/DS126/R (May 25, 1999).....25 9. Panel Report,  Japan  –   Measures Affecting Consumer Photographic Film and Paper , WT/DS44/R (Apr. 22, 1998) …………………………...……………………………….8,9 10. Panel Report,  Japan - Taxes on Alcoholic Beverages, WT/DS8/R, WT/DS10/R, WT/DS11/R (July 11, 1996) ………………………………………………………………7 11. Panel Report, Korea –  Measures Affecting Government Procurement , WT/DS163/R (May 1, 2000)…………………………………………………………………………………...13 12. Panel Report, United States –  Import Prohibition of Certain Shrimp and Shrimp Products - Recourse to Article 21.5 by Malaysia, WT/DS58/RW (June 15, 2001)……………18,19 13. Panel Report, United States - Standards for Reformulated and Conventional Gasoline, WT/DS2/R (May 20, 1996)………...…………………………………..…………….4,8,14 -GATT PANEL R EPORTS-

iv

1. Report of the Panel, Canada  –   Administration of the Foreign Investment Review Act , L/5504 (Feb. 7, 1984), GATT B.I.S.D. (30 th Supp.) at 140 (1985)………………..……11 2. Report of the Panel, Canada  –   Import Distribution and Sale of Certain Alcoholic Drinks th by Provincial Marketing Agencies, DS17/R (Feb. 18, 1992), GATT B.I.S.D. (36  Supp.)

at 27 (1993)..........................................................................................................................9 3. Report of the Panel, Canada –   Measures Affecting Exports Of Unprocessed Herring And Salmon, (Nov. 20, 1987) L/6268, GATT B.I.S.D. (35 th Supp.) at 98…………………....14 4. Report of the Panel, Canada/Japan  –   Tariff on Imports of Spruce, Pine Fir (SPF)  Dimension Lumber, L/6470 (July 19, 1989), GATT B.I.S.D (36th Supp.) at 167 (1990)…4 5. Report of the Panel,  European Economic Community - Measures on Animal Feed  Proteins, 14, L/4599 (Mar. 14, 1978), GATT B.I.S.D. (37 th Supp.) at 86 (1991)…….......4 6. Report of the Panel, Japan –  Customs Duties, Taxes and Labeling Practices on Imported Wines and Alcoholic Beverages, L/6031 (Nov. 10, 1987), GATT B.I.S.D. (34 th Supp.) at 83 (1988)…………………………………………………………………………………..5 7. Report of the Panel, Thailand  –   Restrictions on importation of and Internal Taxes on Cigarettes, (Oct. 5, 1990) DS10/R, GATT B.I.S.D. (37 th Supp.) at 200...........................14 8. Report of the Panel, United States  –   Imports of Certain Automotive Spring Assemblies, (June 11, 1982) L/5333, GATT B.I.S.D. (30 th Supp.) at 107…………………………….18 9. Report of the Panel, United States  –   Measure Affecting Alcoholic and Malt Beverages, DS23/R (June 19, 1992) GATT B.I.S.D. (39 th Supp.) at 206 (1993) …………………9, 10 10. Report of the Panel, United States  –   Restrictions on Import of Tuna, GATT Doc. DS 29/R, June 16, 1994, reprinted in 33 I.L.M. 839 (1994)…………………………..……..14 11. Report of the Panel, United States - Section 337 of the Tariff Act of 1930, (Feb. 2, 1988), GATT B.I.S.D. (36 th Supp.) at 345 (1989)………………………………………….3,12,14 12. Report of the Panel, United States - Taxes on Petroleum and Certain Imported Substances, L/6175 (June 17, 1987), GATT B.I.S.D. (34 th Supp.) at 136 (1988)……..…9

-ICJ CASES-

1. Case concerning Kasikili/Sedudu Island (Botswana/Namibia), 1999 I.C.J. 1059, (Dec. 13).........................................................................................................................................2 2. Case Concerning the Arbitral Award of 31 July 1989 (Guinea-Bissau v. Senegal) 1991 I.C.J. 69,(Nov. 12)……………………………………………………………………..…..2

v

3. Case Concerning the Barcelona Traction Light and Power Co., (Belg. v. Spain) [1970] I.C.J. 32 (2nd phase) (Feb. 5)…………………………………………………………..…24 4. LaGrand (Germany v. U.S.), 2001 I.C.J. Rep. 501, (June 27)…………………………….2 5. Legality of Use of Force (Serbia and Montenegro v. Belgium) (Preliminary Objections), 2004 I.C.J. 318, (Dec. 15)…………………………………………………………………2 6. Mavrommatis Palestine Concessions case, P.C.I.J. Series A, No. 2 (1924)……………..13 7. Military and Paramilitary Activities case (Nicaragua v. U.S.) [1986] I.C.J. Rep. 14, 22 (June 27)……………………………………………………………………………....21,25 -OTHER CASES-

1. CMS Gas Transmission Company v. Argentine Republic, ICSID Case No. ARB/01/8, Decision on Annulment, (Sep. 25, 2007) , 7 ICSID Rep. 494…………………………...22 2. Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, ICSID Case No. ARB/01/3, Decision on Jurisdiction, (May 22, 2007)……………………………………22 3. LG&E Energy Corp., LG&E Capital Corp., LG&E International Inc. v. The Argentine Republic, ICSID Case No. ARB/02/1, Decision on Liability, (Oct. 3, 2006) ……………22 4. Sempra Energy International v. The Argentine Republic, ICSID Case No.ARB/02/16, Decision on Annulment, (Sept. 28, 2007)……………………………………………..…22 -WTO MATERIALS-

1. Committee on Regional Trade Agreements,  Note by the Secretariat: Inventory of NonTariff Provisions in Regional Trade Agreements, WTO Doc. WT/REG/W/26 (May 5, 1998)……………………………………………………………………………………...23 2. Contracting Parties Decision,  Article XXI - United States Exports Restrictions, CP.3/SR.22, at 7 (June 8, 1949), GATT B.I.S.D. II/28 (2 nd Supp.) at 28………………..20 3. Working Party on Domestic Regulation,  Note by the Secretariat: "Necessity Tests" in the WTO, S/WPDR/W/27, (Dec. 2, 2003)................................................................................14 -ARTICLES-

1. Andrew Emmerson, Conceptualizing Security Exceptions: Legal Doctrine or Political  Excuse, 11 J. I NT’L ECON. L. 135 (2010)…………………………………………………20 2. Bradly J. Condon, The Existence of a Duty to Negotiate in the General Exceptions of GATT and GATS April 14, 2005, at 9, available at SSRN 704749…………..………….19 3. Dapo Akande & Sope Williams,  International Adjudication on National Security Issues: What Role for the WTO?, 43 VA. J. I NT’L L. 365 (2003)………………………..……21,22

vi

4. Donald H. Regan, Regulatory Purpose and “Like Products” in Article III:4 of the GATT (With Additional Remarks on Article III:2), 36(3) J. W ORLD TRADE 447 (2002)………...3 5. E.W. Vierdag, The Time of the “Conclusion” of a Multilateral  Treaty: Article 30 of the Vienna Convention on the Law of Treaties and Related Provisions , 64 BRIT. Y.B. I NT’L L. 100 (1988)..........................................................................................................................12 6. Felicity Deane, The WTO, the National Security Exception and Climate Change , 2 CARBON AND CLIMATE L. R EV. 149 (2012)………………………………………………23 7. Gabrielle Marceau & Joel Trachtman, The Technical Barriers to Trade Agreement, the Sanitary and Phytosanitary Measures Agreement , and the GATT , 36 J. W ORLD TRADE 811 (2002)………………………………………………………………………….........2,6 8. H. Lauterpacht,  Restrictive Interpretation and the Principle of Effectiveness in the  Interpretation of Treaties, 26 BRIT. Y.B. I NT'L L. 48(1949)………………...................….8 9. Henrik Horn & Petros C. Mavroidis, The Permissible Reach of National Environmental  Policies, 42(6) J. W ORLD TRADE 1107(2008)……………………………………….…….3 10. Jan McDonald, Domestic Regulation, Harmonization, and Technical Barriers to Trade, 4 WORLD TRADE R EV. 249 (2005)…………………………………………………………20 11. John H. Jackson,  National Treatment Obligations and Non-Tariff Barriers, 10 M ICH. J. I NT'L L. 207(1989)…………………………………………………………………………3 12. Karl Wolfram, Conflict Between Treaties, in 7 E NCYCLOPEDIA OF PUBLIC I NTERNATIONAL LAW 468 (Berhardt ed., 1984); Wilfred Jenks, The Conflict of Law Making Treaties, 29 BRIT. Y.B. I NT’L L. 401 (1953)…………………………………………………………..12 13. Kevin C. Kennedy, The Status of the Trade-Environment-Sustainable Development Triad in the DOHA Round Negotiations and in Recent U.S. Trade Policy , 19 I ND. I NT'L & COMP. L. R EV. 529 (2009)………………………………………………………………..17 14. Kim Shyan Fam et. al., The Influence Of Religion On Attitudes Towards The Advertising Of Controversial Products, 38 EUR . J. MARKETING 537 (2004)…………………………..7 15. Laurent A. Ruessmann,  Putting the Precautionary Principle in its Place: Parameters for the Proper Application of a Precautionary Approach and the Implications for Developing Countries in Light of the Doha WTO Ministerial , 17 AM. U. I NT’L L. R EV. 905 (2005)...15 16. Marjorie M. Whiteman, Jus Cogens in International Law, with a Projected List , 7 GA. J. I NT’L & COMP. L. 609 (1977)…………………………………………………………….24 17. Michael J. Kosnett et al.,  Recommendations for Medical Management of Adult Lead  Exposure, 115(3) E NVIRON. HEALTH PERSPECT. 463 (2007)……………………………16 18. P. Alford, The Self-Judging WTO Security Exception, 3 UTAH L. R EV. 697 (2011)…….20 vii

19. Pauwelyn, Rien ne va Plus: Distinguishing Domestic Regulation from Market Access in GATT and GATS  4 WORLD TRADE R EV. 131 (2005)…………………………………….11 20. R. Hudec, The Product-Process Doctrine in GATT/WTO Jurisprudence, in NEW DIRECTIONS IN I NTERNATIONAL ECONOMIC LAW: E SSAYS IN HONOR OF J.H. JACKSON 191 (M. Bronckers et al. eds., 2002)………………………………………………………….11 21. Raj Bhala,  National Security and International Trade Law: What the GATT Says, and What the United States Does, 19 U. PA. J. I NT’L ECON. L. 263 (1998)………………..…20 22. Randolph N Jonakait, The Mens Rea for the Crime of providing Material Resources to a  Foreign Terrorist Organization, 56 BAYLOR L. R EV. 861 (2004)……………...………..23 23. Richard Sutherland Whitt, The Politics of Procedure: An Examination of the GATT  Dispute Settlement Panel and Article XXI Defense in the Context of the U.S. Embargo of  Nicaragua, 19 LAW & POL’Y I NT’L BUS. 603 (1987)…………………………………….20 24. Robert Stelzer, GATT Doctrine and the Limits of the WTO: An Investigation into Germany's Stem Cell Act, 42(5) J. WORLD TRADE 877 (2008)…………………….…11,13 25. Robert V. Percival, Who's Afraid of the Precautionary Principle?, 23(1) PACE E NVTL. L. R EV. 18 (2005-06)……………………………………………………………………..…16 26. Robyn Briese & Stephan Schill,  If the State Considers: Self-Judging Clauses in  International Dispute Settlement , 13 MAX PLANCK U. N. Y. B. 61, 98 (2009)……….22,24 27. Roman Boed, State of Necessity as a Justification for Internationally Wrongful Conduct , 3 YALE HUM. R TS. & DEV. L.J. 1, 17 (2000)………………………………………..……24 28. Stephan Schill,  International Investment Law and the Host state’s Power to Handle  Economic Crises  –   Comment on the ICSID Decision in LG&E v. Argentina, 24 AM. J. I NT'L ARB. 211 (2007)…………………………………………………………………....22 29. Theodore I. Lidsky and Jay S. Schneider,  Lead Neurotoxicity in Children: Basic  Mechanisms and Clinical Correlates, 126(1) B RAIN 5 (2003)…………………………..16 30. Thomas Cottier & Panagiotis Delimatsis,  Article XIV bis GATS: Security Exceptions, Oct. 7, 2008, at 9, available at SSRN 1371001……………………………………………….23 31. Waldock, Third Report on the Law of Treaties, 2 Y.B. I NT’L L. COMM’ N 313 (1964)……4 32. Wesley A. Cann Jr., Creating Standards and Accountability for the Use of the WTO Security Exception: Reducing the Role of Power-Based Relations and Establishing a New  Balance Between Sovereignty and Multilateralism, 26 YALE J. I NT’L L. 413 (2001)…...21 33. William B. Blankenburg,  News Accuracy: Some Findings on the Meaning of Errors, 20 THE JOURNAL OF COMMUNICATION 831 (1970)…………………………………….……25

viii

-BOOKS-

1. ARTHUR E. APPLETON, U NITED  NATIONS CONFERENCE

ON

TRADE

AND

DEVELOPMENT,

DISPUTE SETTLEMENT: TECHNICAL BARRIERS TO TRADE (2003)…….…………………...1 2. BLACK ’S LAW DICTIONARY (9th ed., 2009)……………………………..………….......2,19 3. JAGDISH BHAGWATI, TRADE AND CULTURE: AMERICA’S BLIND SPOT, IN: THE WIND OF THE HUNDRED DAYS: HOW WASHINGTON MISMANAGED GLOBALIZATION (2000)……......7 4. JAMES

A.

THERRELL,

U.S.

CONSUMER

PRODUCT

SAFETY

DETERMINATION GUIDELINES: R ELATING CHILDREN’S AGES AND PLAY BEHAVIOR  (Timothy

TO

COMMISSION,

AGE

TOY CHARACTERISTICS

P. Smith ed., 2002) ……………………………………....5

5. JOEL P. TRACHTMAN, THE I NTERNATIONAL ECONOMIC LAW R EVOLUTION AND THE R IGHT TO R EGULATE (2006)…….……………………………………………………………….16

6. JOHN H. JACKSON, WORLD TRADE A ND THE LAW OF GATT (1969)………...………….21 7. MARK E. VILLIGER , COMMENTARY

ON THE

1969 VIENNA CONVENTION

ON THE

LAW

OF

TREATIES (2009)……………...……………………………………………..…2,4,12,13,21 8. MICHAEL TREBILCOCK

ET. AL.,

THE R EGULATION

OF I NTERNATIONAL

TRADE (4th  ed.,

2012)...................................................................................................................................10 9. OPPENHEIM’S I NTERNATIONAL LAW  (R.Y. Jennings & A. Watts eds., 9 th  ed., 1992)……………………………………………………………………………………4,12 10. OXFORD

ADVANCED

LEARNER ’S

DICTIONARY

OF

CURRENT

E NGLISH

(7th ed.,

2005)………………………………………………………………………………...……19 11. PETER VAN DEN BOSSCHE ET AL., MAASTRICHT FACULTY OF LAW WORKING PAPER , WTO R ULES ON TECHNICAL BARRIERS TO TRADE (2005-06)……….………………………..1,14 12. PETER VAN DEN BOSSCHE, THE LAW AND POLICY OF THE WORLD TRADE ORGANIZATION (2005)……………………………………………………...……………………...15, 18,19 13. UNICEF, PROGRAMMING EXPERIENCES I N EARLY CHILD DEVELOPMENT (1st  ed., 2006)……………………………………………………………………………………….5 14. U NITED STATES E NVIRONMENTAL PROTECTION AGENCY, TESTING YOUR HOME FOR LEAD IN PAINT, DUST, A ND SOIL (2000)………………………………………………………17

15. WILLIAM J. DAVEY, E NFORCING WORLD TRADE R ULES (2006)………………………….13 16. WORLD HEALTH ORGANISATION, CHILDHOOD LEAD POISONING (2010)………………...16 17. WORLD TRADE ORGANISATION, 1 WTO A NALYTICAL I NDEX: GUIDE

TO

WTO LAW

AND

PRACTICE 600 (1995)……………………………………………………………………..20

ix

STATEMENT OF FACTS Zwovka

Zwovka is a developing country, 35  of whose population is under the age of eighteen. 70% of the population belongs to the Troikan faith while the remaining 30% practices the Eskron faith. Dolls depicting Mythological Heroes

Dolls/Action figures depicting Troikan mythological heroes Legann and his brothers are very  popular among the children as well as adults. Traditionally, such dolls were made of wood and painted with natural colours. The dolls are classifiable under the Harmoised System  Number (HSN) heading 9503. Since 2000, all such dolls are manufactured using lead based  paint. The dolls contain 300 part per million of lead. Enroda

Enroda is a least developed nation that has a thriving toy industry and exports certain toys only to Zwovka, falling under the heading 9503 (Tricycles, scooters, pedal cars and similar wheeled toys). Troikan Religious Council (TRC)

The TRC in 1990 enacted a directive under which only artisans or entities specifically licensed by the TRC could manufacture the dolls. Under the Zwovka Uniform Code, the rights of religious people are limited restricted to verbal warnings and confiscation of  properties and are enforceable against private citizens who practice Troikan faith and commercial enterprises in Zwovka. The objective of this directive was to maintain uniformity among the dolls and reduce the number of dolls. The few artisans granted the license in 1990, consolidated to be two independent companies. As of 2012, the two companies have a  production capacity of 200,000 units a year and are the only license holders. Creation of Industrial Zones

Under the policy enacted in 1986, the Government of Zwovka provided financial support to selective industries. All such industries, including the doll manufacturing units are located in the Industrial Zones. These zones comprise of residences as well as amenities such as schools for the families of the workers. Exposure of Children to ‘Lead’

In 2002, the Group for Nurturing the Little and Under Privileged (an NGO), issued a report highlighting that children living in Industrial Zones were in particular risk of chronic exposure to lead poisoning. Fifteen percent of children of Zwovka are raised in Industrial x

Zones. To mitigate the harmful effects, the Government introduced the Health Act but many  NGOs including the Group for Nurturing the Little and Under Privileged, believed that the Act stopped short of doing enough. Political Relations between Zwovka and Enroda

Zwovka and Enroda have had difficult political relations. While the relations post 1967 have  been otherwise normal, Zwovka has sometimes accused Enroda of using non conventional forms of warfare. Enroda on its part has expressed its helplessness in controlling the  problems caused by organised syndicates. Organisation for Anarchy in Zwovka

The Organisation was started by some retired military officials in Enroda and comprises of more than half a million members. The members have a duty to do everything in their capacity to undermine Zwovka. In early 2005, the Zwovka Times, a Zwovkan Newspaper  published a report on the OAZ which described the OAZ as a “rag-tag militia of megalomaniacs who may have sympathizers but not resources to put their deviant goals into  practice” Lead in toys exported by Enroda to Zwovka

On Dec 11, 2011 the “Heritage”, a Zwovkan Newspaper, published an article titled “OAZ targets our Children” in which intelligence sources suggested that the OAZ was dire cting its members and sympathisers in the toy industry to coat toys to be exported to Zwovka with extra levels of lead based paints. Between the periods of Dec to Jan 2012, the Custom officials in Zwovka found that of the ten sample consignments examined, three were found to have lead content of 600ppm while the rest had a lead content between 150 to 300 ppm. Environment and Security of Children Act, 2012

Hence, on May 5 2012, the Zwovka Parliament passed the Environment and Security of Children Act. Section 2, Environment and Security of Children Act, 2012 prohibits the import of all toys, as defined in Section 1 (Tricycles, scooters, pedal cars and similar wheeled toys, falling under Zwovkan Tariff Code Heading 9503, imported into Zwovka) with a lead content of more than 100 ppm. Section 3, Environment and Security of Children Act, 2012 restricts the import of all toys defined in Section 1 for an interim period of 12 months from Enroda.

xi

IDENTIFICATION OF MEASURE OF ISSUES

Measure 1: Section 2, Environment and Security of Children Act, 2012 prohibits the import

of all toys, as defined in Section 1 ( Tricycles, scooters, pedal cars and similar wheeled toys, falling under Zwovkan Tariff Code Heading 9503, imported into

Zwovka) with a lead content of more than 100 ppm.

Measure 2:  Section 3, Environment and Security of Children Act, 2012 restricts the import

of all toys defined in Section 1 for an interim period of 12 months from Enroda.

WTO Measures at issue:  Preamble, Article 2.1 and 2.2, TBT Agreement;

Article III, XI, XX and XXI, GATT.

xii

SUMMARY OF ARGUMENTS

I. THAT SECTION 2, ENVIRONMENT AND SECURITY OF CHILDREN ACT, 2012 IS CONSISTENT WITH ARTICLE 2.1,

AGREEMENT ON TECHNICAL BARRIERS TO TRADE.

1.1 Article 2, Agreement on Technical Barriers to Trade applies to Section 2, Environment and Security of Children Act, 2012. 1.2 The provisions under the TBT Agreement have to be analysed before the GATT  provisions. 1.3 Articles 31-33, VCLT form part of customary rules of interpretation and its principles must be followed by the Panel. 1.3.1 The ordinary meaning of ‘like’ leaves the meaning of ‘like products’ unclear. 1.3.2 The terms ‘like products’ and ‘less favorable treatment’ in Article 2.1, TBT agreement must be interpreted in the context of the GATT. 1.3.3 The Border Tax Adjustments Report is also relevant for interpreting the term ‘like  products’ under Article 31 (2) (b), VCLT. 1.2 The toys mentioned in Section 1, ESC Act and the dolls/action figures depicting the folk heroes are not ‘like products’. 1.2.1. Ride-on toys and dolls have different end uses. 1.2.2. Ride-on toys and dolls have different physical properties. 1.2.3. Consumer tastes and habits are significantly different for the two products. A. Ride-on toys and dolls are popular among different age groups. B. Cultural values present in dolls do not exist in ride-on toys. C. Religious restrictions exist for dolls but not for ride-on toys. D. Harmonised System is not relevant to the ‘like products’ analysis. 1.3 Arguendo, the ride-on toys have not been accorded a less favourable treatment than ‘like’ domestic products. 1.3.1 Section 2, ESC Act has not been enacted so as to afford protection to the ‘like’ domestic  products. A. Conditions of competitions and regulatory purpose are both necessary to ascertain  protectionist purpose. B. The regulatory purpose of the section 2, ESC Act is not protectionist in nature.

xiii

C. Regulatory distinctions between ride-on toys and dolls do not distort the conditions of competition.

II. THAT ARTICLE III:4, GATT IS NOT APPLICABLE TO SECTION 2, ESC ACT.

2.1 Section 2, ESC Act is affecting ‘importation of products’ and not ‘imported products’ under Article III:4, GATT.

III. THAT ARTICLE XI, GATT IS NOT APPLICABLE TO SECTION 2, ESC ACT.

3.1 There is a direct conflict between Article XI, GATT and TBT Agreement and hence Section 2, ESC Act should be analysed only under the TBT Agreement. 3.2 Arguendo, Article 2, TBT Agreement is lex specialis to Article XI, GATT.

IV. THAT SECTION 2, ESC ACT IS CONSISTENT WITH ARTICLE 2.2, TBT AGREEMENT.

4.1 Section 2, ESC Act is necessary for the protection of human health and environment. 4.1.1 An analysis of ‘necessary’ includes ‘reasonable alternative’ test and ‘weighing and  balancing’ test. A. Section 2, ESC Act is necessary for the protection of human health. A1. The contribution of the Section 2, ESC Act to the protection of human health is significant. A2. The protection of human health is an extremely important value. A3. The impact of section 2, ESC Act on the imports from Enroda is not severe. A4. A ‘reasonable alternative measure’ is not available. B. Section 2, ESC Act is necessary for the protection of environment. B1. The contribution of the section 2, ESC Act to the protection of environment is significant. B2. The protection of environment is an extremely important value. B3. The impact of section 2, ESC Act on the imports from Enroda is not severe. B4. A ‘reasonable alternative measure’ is not available. 4.2 The application of section 2, ESC Act does not violate the sixth recital of the Preamble, TBT Agreement. 4.2.1 Section 2, ESC Act does not create unjustifiable and arbitrary discrimination. 4.2.2 Section 2, ESC Act is not a disguised restriction on international trade. 4.2.3 There is no duty to negotiate on Zwovka.

xiv

V. THAT SECTION 3, ESC ACT IS NOT A TECHNICAL REGULATION AND HENCE, IS GOVERNED BY GATT.

5.1 Article 2, TBT Agreement does not apply to section 3, ESC Act. 5.2 Section 3, ESC Act is justified under Article XXI, GATT. 5.2.1 Article XXI, GATT is a self judging clause. A. Article XXI, GATT is a self judging clause when interpreted according to Articles 31 and 32, VCLT. B. Article XXI, GATT is a self judging clause when interpreted according to the  jurisprudence available. 5.2.2 Arguendo, Zwovka invoked the security exception under Article XXI, GATT in good faith. A. An ‘essential security interest’ does exist for Zwovka. A1. An emergency in international relations does exist for z wovka. III. OAZ is a ‘Terrorist Organisation’. IV. Zwovka is under an obligation to protect its citizens. A2. Zwovka has enacted section 3, ESC Act in good faith. II. Zwovka has relied on objective evidence to reach the conclusion about the threat to its citizens. I.1 The intelligence reports and the checks on the imports by the custom officials establishes the fact that OAZ is targeting the children of Zwovka. I.2 Newspaper articles and statesecrets.com cables corroborate the fact that OAZ is targeting the children of Zwovka.

xv

LEGAL PLEADINGS I. THAT SECTION 2, ENVIRONMENT AND SECURITY OF CHILDREN ACT, 2012 IS CONSISTENT WITH ARTICLE 2.1, AGREEMENT ON TECHNICAL BARRIERS TO TRADE. 1.1 ARTICLE 2, AGREEMENT ON TECHNICAL BARRIERS TO TRADE APPLIES TO SECTION 2, ENVIRONMENT AND SECURITY OF CHILDREN ACT, 2012.

Article 2, Agreement on Technical Barriers to Trade (hereinafter referred to as TBT Agreement) is applicable only to technical regulations.1 A technical regulation should consist of the following three essentials: I.

The document must apply to an identifiable product or group of products.

II.

The document must lay down one or more characteristics of the product.

III.

Compliance with the product characteristics must be mandatory. 2

Section 2, Environment and Security of Children Act, 2012 (hereinafter referred to as ESC Act) entails a restriction on the import of tricycles, scooters, pedal cars and similar wheeled toys falling under Zwovkan Tariff Code Heading 9503 (hereinafter referred to as ride-on toys). Therefore, the products on which it applies are identifiable. Product characteristics include ‘any objectively definable features, qualities, attributes, or other distinguishing mark’ of a product. 3  They might relate to a product's composition. 4 Therefore, section 2, ESC Act, which imposes a limit of 100 p.p.m. on maximum lead content,5 lays down a product characteristic. Compliance with the product characteristic is mandatory because a measure that does not fulfill the characteristic will not be allowed in Zwovka.6 Hence, section 2, ESC Act is a technical regulation. 1.2 THE

PROVISIONS UNDER THE

TBT AGREEMENT

HAVE TO BE ANALYSED BEFORE THE

GATT PROVISIONS.

1

PETER VAN DEN BOSSCHE ET AL., MAASTRICHT FACULTY OF LAW WORKING PAPER , WTO R ULES ON TECHNICAL BARRIERS TO TRADE 15 (2005-06); ARTHUR E. APPLETON , U NITED  NATIONS CONFERENCE ON TRADE AND DEVELOPMENT , DISPUTE SETTLEMENT : TECHNICAL BARRIERS TO TRADE 14 (2003). 2   Appellate Body Report,  European Communities  –   Trade Description of Sardines,  ¶¶ 189-195, WT/DS231/AB/R  (Sept. 26, 2002); Appellate Body Report,  European Communities-  Measures Affecting  Asbestos and Asbestos-Containing Products, ¶¶ 66-70, WT/DS135/AB/R (Mar. 12, 2001) [hereinafter Appellate Body Report, E.C. –   Asbestos]; WTO — TECHNICAL BARRIERS AND SPS MEASURES 187-190 (Rudiger Wolfrum et al. eds., 2007); APPLETON, supra note 1, at 7. 3  Appellate Body Report,  E.C. –  Asbestos, ¶ 67. 4  Id. 5  ¶ 15, Moot Problem. 6  Id.

1

The TBT Agreement provides for specific obligations in comparison to those contained in the GATT provisions. Obligations under the TBT Agreement have to be complied with before complying with the GATT obligations. 7 Hence, the Panel must analyse the TBT Agreement  provisions before moving onto GATT obligations. 1.3 ARTICLES 31-33, V.C.L.T. FORM PART OF CUSTOMARY RULES OF INT ERPRETATION AND ITS PRINCIPLES MUST BE FOLLOWED BY THE PANEL.

The panels must clarify the existing provisions of covered agreements (the General Agreement and the other ‘covered agreements’ of the Marrakesh Agreement Establishing the World Trade Organization (hereinafter referred to as the W.T.O. Agreement)) in accordance with customary rules of interpretation of public international law. 8 Articles 31-33 of the Vienna Convention on the Law of Treaties 9 (hereinafter referred to as V.C.L.T.) have attained the status of customary international law. 10  This position has been reaffirmed by the Appellate body in various cases. 11 1.3.1 THE

ORDINARY MEANING OF ‘LIKE’  LEAVES THE MEANING OF ‘LIKE PRODUCTS’

UNCLEAR .

According to Article 31, the ordinary meaning is the starting point of the process of interpretation.12 The ordinary meaning of ‘like’, according to the Black’s Law Dictionary, is ‘similar or substantially similar’.13  Since the textual interpretation leaves the meaning of ‘like’ unclear, this ordinary meaning has to be read in its context. 1.3.2 THE

TERMS ‘LIKE PRODUCTS’  AND ‘LESS FAVORABLE TREATMENT’ IN

ARTICLE 2.1,

TBT AGREEMENT MUST BE INTERPRETED IN THE CONTEXT OF THE GATT.

7

  Panel Report,  European Communities  –   Trade Description of Sardines,  ¶ 7.16, WT/DS231/AB/R (May 29, 2002). See also Gabrielle Marceau & Joel Trachtman, The Technical Barriers to Trade Agreement, the Sanitary and Phytosanitary Measures Agreement , and the GATT , 36 J. WORLD TRADE 811, 875 (2002). 8   Understanding on Rules and Procedures Governing the Settlement of Disputes art. 3.2, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, 1869 U.N.T.S. 401 [hereinafter DSU]. 9  Vienna Convention on the Law of Treaties art.31-33, May 23, 1969, 1155 U.N.T.S. 311 [hereinafter V.C.L.T.]. 10   See, e.g., Legality of Use of Force (Serbia and Montenegro/Belgium) (Preliminary Objections), 2004 I.C.J. 318, ¶100 (Dec. 15); LaGrand (Germany/U.S.), 2001 I.C.J. 501, ¶ 99 (June 27); Case concerning Kasikili/Sedudu Island (Botswana/Namibia), 1999 I.C.J. 1059, ¶ 18 (Dec. 13); Arbitral Award of 31 July 1989 (Guinea-Bissau/Senegal) 1991 I.C.J. 69, ¶ 48 (Nov. 12). 11   Appellate Body Report, United States  –   Standards for Reformulated and Conventional Gasoline , 17, WT/DS2/AB/R (Apr. 29, 1996) [hereinafter Appellate Body Report, U.S. –   Gasoline]; Appellate Body Report,  Japan - Taxes on Alcoholic Beverages , 10, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R (Nov. 1, 1996) [hereinafter Appellate Body Report ,  Japan –  Alcoholic Beverages II ]. 12 MARK E. VILLIGER , COMMENTARY ON THE 1969 VIENNA CONVENTION ON THE LAW OF TREATIES 426 (2009). 13 BLACK ’S LAW DICTIONARY 1012 (9th ed., 2009).

2

The Preamble, TBT Agreement is part of the context of Article 2.1, TBT Agreement and also sheds light on the object and purpose of the Agreement. 14  The preamble, TBT Agreement seeks to further the objectives of GATT. 15  The Appellate Body in United States-Clove Cigarettes held that the TBT Agreement expands on existing GATT disciplines and emphasizes that the two Agreements should be interpreted in a coherent and consistent manner.16 Therefore, firstly, an analysis of Article 2.1 depends on the entire text of the TBT Agreement, including its preamble and other contextual elements like Article III:4, GATT.17 Secondly, the Appellate Body has previously held that Article III:4, GATT has to be interpreted in the context of Article III:1, GATT as the latter is the ‘general principle’ on which the rest of the Article III is based. 18 Article III:1, GATT articulates a general principle that internal measures should not be applied so ‘as to afford protection’ to domestic  production,19  i.e. it obliges members to provide equality of competitive conditions for imported products in relation to domestic products. 20 Therefore, an analysis of Article III:4, GATT as well as under Article 2.1, TBT Agreement is a determination about the nature and extent of a competitive relationship between and among the products. 21 Thirdly, Article III:2, GATT is also relevant context for Article III:4, GATT as it would be incongruous if, due to a significant difference in the product scope of these two provisions, members were prevented from using one form of regulation, to protect domestic production of certain products, but were able to use another form of regulation, to achieve protectionist

14

 Appellate Body Report, United States-Measures Affecting the Production and Sale of Clove Cigarettes , ¶ 100, WT/DS406/AB/R (Apr 4, 2012) [hereinafter Appellate Body Report, U.S. –  Clove Cigarettes]. 15   Agreement on Technical Barriers to Trade, Preamble, Apr. 12, 1979, 31 U.S.T.  405, 1868 U.NT.S. 120 [hereinafter TBT Agreement]. 16  Appellate Body Report, U.S. –  Clove Cigarettes, ¶ 91. 17  Id. at ¶ 89. 18  Appellate Body Report,  Japan-Alcoholic Beverages II , 18; Appellate Body Report,  E.C. –  Asbestos, ¶ 93. See also Donald H. Regan,  Regulat ory Purpose and “Like Products” in Article III:4 of the GATT (With Additional  Remarks on Article III:2), 36(3) J. WORLD TRADE 447 (2002). 19  General Agreement on Tariff and Trade art. III:4, Oct. 30, 1947, 61 Stat. A-11, 55 U.N.T.S. 194 [hereinafter GATT]. See also Report of the Panel, United States - Section 337 of the Tariff Act of 1930,  ¶ 5.10, L/6439 (Feb. 2, 1988), GATT B.I.S.D. (36 th Supp.) at 345 (1989) [hereinafter GATT Panel Report, U.S. – Section 337]. See also John H. Jackson,  National Treatment Obligations and Non-Tariff Barriers, 10 M ICH. J. I NT'L L. 207, 210 (1989). 20 Appellate Body Report,  Japan-Alcoholic Beverages II , 16; Appellate Body Report, Canada - Certain  Measures Concerning Periodicals, 18, WT/DS31/AB/R (July 30, 1997); Appellate Body Report,  Korea  –   Measures Affecting Imports of Fresh, Chilled and Frozen Beef , ¶¶ 16-17, WT/DS161/AB/R (Jan. 10, 2001) [hereinafter Appellate Body Report,  Korea  –  Beef]. See also Henrik Horn & Petros C. Mavroidis, The  Permissible Reach of National Environmental Policies, 42(6) J. WORLD TRADE 1107, 1156 (2008). 21  Appellate Body Report,  E.C. –  Asbestos, ¶ 99.

3

 purpose.22 This would frustrate a consistent application of the ‘general principle’ in Article III:1.23 1.3.3 THE BORDER TAX ADJUSTMENTS R EPORT

IS ALSO RELEVANT FOR INTERPRETING

THE TERM ‘LIKE PRODUCTS’ UNDER ARTICLE 31 (2) (B), V.C.L.T..

Article 31(2)(b), V.C.L.T. refers as a further means of interpretation to any instrument which was made by one or more parties in connection with the conclusion of the treaty. The two conditions for an instrument to fall under Article 31(2)(b), V.C.L.T. are that: I.

It should concern a subject-matter of the treaty24 (but it need not have been eventuated at the time of the conclusion of the t reaty)25.

II.

It must have been accepted by the other parties as an instrument related to t he treaty.26

Such instruments will include agreements inter se  between parties, e.g., interpretative declarations upon ratification or accession. 27 The Working Party Report,  Border Tax Adjustments28  which was made with a view to examine the provisions of the GATT relevant to border tax adjustments, fulfills both the above mentioned criteria. The Report sets out the ‘like product’ test to generally interpret ‘like or similar products’ under the GATT, 1947. This report has been held to be applicable to Article III:4 by the Panel 29 as well as the Appellate Body 30. The test is based on the following criteria on a case by case basis: I. II.

the product's properties, nature and quality (physical characteristics), the product's end-uses in a given market,

III.

consumers' tastes and habits;31

IV.

tariff classification.32

22

 Id.  Id. 24  Waldock, Third Report  on the Law of Treaties, 2 Y.B. I NT’L L. COMM’ N 313 (1964), ¶ 5. 25 OPPENHEIM ’S I NTERNATIONAL LAW 632 (R.Y. Jennings & A. Watts eds., 9th ed., 1992). 26  Waldock, supra note 24, at ¶ 16. 27 VILLIGER , supra note 12, at 430. 28  ¶18, L/3464 (Dec. 2,1970), GATT B.I.S.D. (18 th Supp.) at 97 (1971). 29  Panel Report, United States - Standards for Reformulated and Conventional Gasoline, ¶ 6.8, WT/DS2/R (May 20, 1996) [hereinafter Panel Report, U.S. –  Gasoline ]. 30  Appellate Body Report,  E.C. –  Asbestos, ¶ 101. 31 Supra note 28. 32   Appellate Body Report,  Japan  –   Alcoholic Beverages-II , 21-22. See also Report of the Panel,  European  Economic Community - Measures on Animal Feed Proteins, 14, L/4599 (Mar. 14, 1978), GATT B.I.S.D. (37 th Supp.) at 86 (1991) [hereinafter GATT Panel Report,  E.C.  –   Animal Feed Proteins]; Appellate Body Report, U.S.  –   Gasoline, ¶ 6.8; Report of the Panel, Canada/Japan  –   Tariff on Imports of Spruce, Pine Fir (SPF)  Dimension Lumber, ¶ 5.11-5.12, L/6470 (July 19, 1989), GATT B.I.S.D (36th  Supp.) at 167 (1990) (tariff classification has been used in these cases). 23

4

Tariff classification was not mentioned Report, but was included by subsequent panels as a criterion.33 Additionally, panels must evaluate all the other relevant evidence.34 1.2 THE

TOYS MENTIONED IN SECTION

1, ESC ACT

AND THE DOLLS/ACTION FIGURES

DEPICTING THE FOLK HEROES ARE NOT ‘LIKE PRODUCTS’.

The products at issue in the instant case are the Zwovkan dolls/action figures 35  (hereinafter referred to as dolls) and the toys exported by Enroda to Zwovka i.e. Tricycles, scooters, pedal cars and similar wheeled toys 36. These two categories of products are not ‘like products’ under Article 2.1 TBT Agreement if the analysis under the criteria mentioned above (from subheadings 1.1.1 to 1.1.2) is carried out. 1.2.1. R IDE-ON TOYS AND DOLLS HAVE DIFFERENT END USES.

The following two considerations should be kept in mind while examining the end-use of a  product: I. II. III.

The capability to perform similar functions; Such end-use should represent the most common end-use of that product. 37 The end-use evaluation should be specific and not general. 38

According to U.N. General Assembly resolution, 39 and UNICEF studies, 40 there are various aspects of child development. Dolls and ride-on toys have different end use as they help in different kinds of child development. Dolls have the following end use: A. They help in social and emotional development as they are generall y used for ‘pretend and role play’ 41 which helps the children to develop social skills, including sharing, cooperation and problem solving. 42 B. Recreation and enjoyment. On the other hand, ride-on toys exported by Enroda have the following end use: 33

 GATT Panel Report, E.C. –  Animal Feed Proteins, ¶ 4.2; Report of the Panel,  Japan –  Customs Duties, Taxes and Labeling Practices on Imported Wines and Alcoholic Beverages,  ¶ 5.6, L/6031 (Nov. 10, 1987), GATT B.I.S.D. (34 th Supp.) at 83 (1988). 34  Appellate Body Report,  E.C. –  Asbestos, ¶ 113. 35  ¶ 2, Moot Problem. 36  Id. 37  Appellate Body Report,  E.C. –   Asbestos, ¶ 117. See also Appellate Body Report, U.S. –  Clove Cigarettes, ¶ 131; JANE M. SMITH, CONG. R ESEARCH SERV., R42733, THE TOBACCO CONTROL ACT’S BAN OF CLOVE CIGARETTES AND THE WTO: A DETAILED A NALYSIS 7 (2012). 38  Appellate Body Report, U.S. –  Clove Cigarettes, ¶ 129. 39  G.A. Res. S-21/2, ¶ 14, U.N. Doc. A/RES/S-27/2 (Oct. 11, 2002). 40  UNICEF, P ROGRAMMING EXPERIENCES I N EARLY CHILD DEVELOPMENT  2 (1st ed., 2006). 41 JAMES A. THERRELL, U.S. CONSUMER PRODUCT SAFETY COMMISSION, AGE DETERMINATION GUIDELINES: R ELATING CHILDREN’S AGES TO TOY CHARACTERISTICS AND PLAY BEHAVIOR   69 (Timothy P. Smith ed., 2002). 42  Id.

5

A. They help in physical health and motor development as ride-on toys are used for developing a sense of balance, physical fitness, and coordination. 43 B. Recreation and enjoyment. The second end-use which is overlapping for both the products doesn’t make them like as it is not sufficient to rely solely on evidence regarding the overlapping end-uses, without examining evidence of the nature and importance of these end-uses in relation to all of the other possible end-uses for the products. 44 Also, ‘recreation and enjoyment’ is not a specific end use. General end use doesn’t give proper guidance to determine the likeness of products 45 and hence shouldn’t be relied upon. 1.2.2. R IDE-ON TOYS AND DOLLS HAVE DIFFERENT PHYSICAL PROPERTIES.

The term ‘like products’ should be more narrowly construed in Article 2.1, TBT Agreement than in Article III, GATT since GATT Article XX does not apply to the TBT Agreement and hence justifications under Article XX are not available to violations of Article 2.1 TBT Agreement.46  The Appellate body has previously observed that if the products at issue are  physically quite different, then a higher burden is placed on the complaining member to establish that there is a competitive relationship between the products. 47 Since the dolls are evidently physically different (they depict folk heroes in Zwovka) 48  from the ride-on toys, therefore the burden of proof is higher on Enroda to put forth evidence to establish that, despite the pronounced physical differences, these two products are like. Furthermore, the Panel in  Japan-Taxes on Alcohol Beverages noted that the term ‘like  products’ suggests that for two products to fall under this category they must share essentially the same physical characteristics.49  Since the ride-on toys and dolls have different physical characteristics, they are not fulfilling an essential requirement of ‘likeness’. 1.2.3. CONSUMER

TASTES AND HABITS ARE SIGNIFICANTLY DIFFERENT FOR THE TWO

PRODUCTS.

43

 Id . at 167.  Appellate Body Report,  E.C. –  Asbestos, ¶ 138. 45  Appellate Body Report, U.S. –  Clove Cigarettes, ¶ 129. 46   Gabrielle Marceau & Joel Trachtman, The Technical Barriers to Trade Agreement, the Sanitary and  Phytosanitary Measures Agreement , and the GATT , 36 J. WORLD TRADE 811, 875, 822 (2002). 47  Appellate Body Report,  E.C. –  Asbestos, ¶ 118. 48  ¶ 2, Moot Problem. 49  Panel Report, Japan - Taxes on Alcoholic Beverages, ¶ 6.22, WT/DS8/R, WT/DS10/R, WT/DS11/R (July 11, 1996). 44

6

In U.S.  –   Clove Cigarettes,  the Appellate body observed that in an analysis of consumer tastes and habits, the market defines the scope of consumers whose preferences are relevant.50 The affected market here is the Toy Market. The parents are the consumers with regard to products meant for children as parents decide what is appropriate for their children. So, all the considerations which the parents might have while buying toys for their children become relevant in the analysis of consumers’ tastes and habits. The considerations which make the two products unlike are: A. R IDE-ON TOYS AND DOLLS ARE POPULAR AMONG DIFFERENT AGE GROUPS.

Dolls are popular among children aged 4-8 years, 51 as well as children of higher age group who collect these dolls as collector’s item 52 whereas the ride-on toys are only popular among the children of 3-6 years. 53 B. CULTURAL VALUES PRESENT IN DOLLS DO NOT EXIST IN RI DE-ON TOYS.

According to the theory of “non-economic objectives”, legitimate non-economic objectives such as culture must also be accommodated in the virtues of free trade. 54  The UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions (2005) also specifies that cultural goods are distinct from the other goods. 55 Depiction of folk heroes  by dolls gives them significant cultural value, which is missing in the ride-on toys. C. R ELIGIOUS RESTRICTIONS EXIST FOR DOLLS BUT NOT FOR RIDE-ON TOYS.

Religious beliefs and sentiments of people have an effect on the consumer tastes like for example, in 2010, Jimi Hendrix shoes carrying pictures of Hindu deities were withdrawn from sales in the US after an outcry by the Indian community.56 People of Eskron faith (30% of the population 57) are prohibited to possess dolls of human form.58  Hence, parents of children of Eskron faith will never prefer dolls figures over the ride-on toys. The ride-on toys are not prohibited in the Eskron faith and hence they have a larger consumer base compared to the dolls. D. HARMONISED SYSTEM IS NOT RELEVANT TO THE ‘LIKE PRODUCTS’ ANALYSIS. 50

 Appellate Body Report, U.S. –  Clove Cigarettes, ¶ 137.  ¶ 2, Moot Problem. 52  ¶ 2, Moot Problem. 53  ¶ 9, Moot Problem. 54 JAGDISH BHAGWATI, THE WIND OF THE HUNDRED DAYS: HOW WASHINGTON MISMANAGED GLOBALIZATION 118 (2000). 55 Convention on the Protection and Promotion of the Diversity of Cultural Expressions art. 1(g), Oct. 20, 2005, 2440 U.N.T.S. 311. 56  US Company Withdraws Shoes Carrying Images Of Hindu Deities , Eco. Times, Sep 22, 2010. See also Kim Shyan Fam et. al., The Influence Of Religion On Attitudes Towards The Advertising Of Controversial Products, 38 EUR . J. MARKETING 537 (2004). 57  ¶ 1, Moot Problem. 58  ¶ 2, Moot Problem. 51

7

The Harmonized System (H.S.) Convention was not designed to determine the likeness of  products according to the GATT. 59 The H.S. Convention’s primary purpose is to determine tariff rates for different categories of goods.60 Hence, even though the Zwovkan Dolls and the ride-on toys have been classified under the same Harmonised System Number Heading (9503),61 this doesn’t make them like. 1.3

,  THE RIDE-ON TOYS HAVE NOT BEEN ACCORDED A LESS FAVOURABLE A RGUENDO 

TREATMENT THAN ‘LIKE’ DOMESTIC PRODUCTS.

The burden of proof is on Enroda to establish that its products have been treated less favourably as compared to the domestic like products of Zwovka. 62 1.3.1 SECTION 2, ESC ACT HAS NOT BEEN ENACTED SO AS TO AFFORD PROTECTION TO THE ‘LIKE’ DOMESTIC PRODUCTS.

As already mentioned: I. II.

Article 2.1 must be interpreted in consistency with Art. III:4, GATT.63 ‘Less favourable treatment’ analysis in Article III:4 expresses the general principle in Article III:1.64

Principle of effectiveness, which flows from the customary rule of treaty interpretation65 mandates that Article III:1 should guide the ‘less favorable treatment’ analysis in Article III:4. The term ‘so as to afford protection’ has been included in the analysis of ‘less favorable treatment’ under Article III:4 in the following manner: A. CONDITIONS

OF COMPETITIONS AND REGULATORY PURPOSE ARE BOTH NECESSARY TO

ASCERTAIN PROTECTIONIST PURPOSE.

A1. Article III protects expectations of equal competitive relationship between imported and domestic products.66  Hence, the analysis of less favourable treatment under Article III:4

59

International Convention on the Harmonized Commodity Description and Coding System preamble, June 14, 1983, 1503 U.N.T.S. 167. 60  Id. 61  ¶ 3 & ¶ 9, Moot Problem. 62   Panel Report,  Japan  –   Measures Affecting Consumer Photographic Film and Paper , ¶ 10.32, WT/DS44/R (Apr. 22, 1998); Panel Report,  European Communities-  Measures Affecting Asbestos and Asbestos-Containing  Products, ¶¶ 8.276, WT/DS135/AB/R (Sep. 18, 2000) [hereinafter Panel Report,  E.C. –  Asbestos]. 63  See supra Part 1.3.2. 64  Id . 65  H. Lauterpacht, Restrictive Interpretation and the Principle of Effectiveness in the Interpretation of Treaties , 26 BRIT. Y.B. I NT'L L. 48, 67 (1949); Panel Report, U.S. –  Gasoline, 23. 66   Report of the Panel, United States - Taxes on Petroleum and Certain Imported Substances , ¶ 5.19, L/6175 (June 17, 1987), GATT B.I.S.D. (34 th Supp.) at 136 (1988). See also Appellate Body Report,  Japan- Alcoholic  Beverages-II, 16.

8

focuses on the “conditions of competition” between imported and domestic like products. 67 The same analysis should be done to examine the violation of Article 2.1. 68 A2. The regulatory purpose of the measure should also be looked at while determining whether it has been applied to modify the conditions of competition to the detriment of imported products.69 In Japan Alcohol , the Appellate Body had observed that the subjective intentions inhabiting the minds of individual legislators or regulators do not bear upon the inquiry of ‘so as to afford protection’.70 However, the Appellate body in Chile-Alcohol observed that the purpose or objectives of a Member’s legislature as a whole, to the extent that they are given objective expression in the statute itself, are pertinent to the inquiry of the measure being protectionist in nature.71  The objective intention of the legislature can be inferred through design, architecture and structure of the measure.72 Even if regulatory purpose is not found relevant in the analysis of discrimination under article III:4, GATT, it definitely has relevance in the analysis of Article 2.1, TBT Agreement as: I.

The context provided by Article 2.2 and object and purpose of the TBT Agreement  provide that Article 2.1 does not prohibit detrimental impact on imports that stems exclusively from a legitimate regulatory distinction. 73

II.

The object and purpose of the TBT Agreement is to strike a balance between the objective of trade liberalization and the Members’ right to regulate. 74 B. THE

REGULATORY PURPOSE OF THE SECTION

2, ESC ACT

IS NOT PROTECTIONIST IN

NATURE.

67

  Appellate Body Report,  Korea  –   Various Measures on Beef , ¶ 136; Appellate Body Report,  Dominican  Republic  –   Measures Affecting the Importation and Internal Sale of Cigarettes,  ¶ 91, WT/DS302/AB/R (May 19, 2005); Report of the Panel, Canada  –   Import Distribution and Sale of Certain Alcoholic Drinks by th  Provincial Marketing Agencies, ¶ 5.12-5.14 & ¶ 5.30-5.31, DS17/R (Feb. 18, 1992), GATT B.I.S.D. (36 Supp.) at 27 (1993); Report of the Panel, United States  –   Measure Affecting Alcoholic and Malt Beverages , ¶ 5.30 DS23/R (June 19, 1992) GATT B.I.S.D. (39 th Supp.) at 206 (1993) [GATT Panel Report, U.S. –  Alcoholic and Malt Beverages); Panel Report, U.S.  –   Gasoline, ¶ 6.10; Panel Report, Canada - Certain Measures Concerning Periodicals, ¶ 75, WT/DS31/R (March 14, 1997) [hereinafter mentioned as Panel Report, Canada –   Periodicals]; Panel Report,  European Communities  –   Regime for the Importation, Sale and Distribution of  Bananas: Recourse to A rt. 21.5 by Ecuador , ¶ 7.179-7.180, WT/DS27/RW/EUC (May 22, 1997); Panel Report,  Japan –  Measures Affecting Consumer Photographic Film and Paper , ¶ 10.379, WT/DS44/R (Apr. 22, 1998). 68  Appellate Body Report, U.S. –  Clove Cigarettes, ¶ 180. 69   Appellate Body Report , Chile  –   Taxes on Alcoholic Beverages, ¶ 62, WT/DS87/AB/R, WT/DS110/AB/R (Jan. 12, 2000). 70  Appellate Body Report,  Japan- Alcoholic Beverages-II , 27-28. 71   Appellate Body Report , Chile  –   Taxes on Alcoholic Beverages, ¶ 62, WT/DS87/AB/R, WT/DS110/AB/R (Jan. 12, 2000). 72  Appellate Body Report,  Japan- Alcoholic Beverages-II , 29. 73  Appellate Body Report, U.S. –  Clove Cigarettes, ¶ 181. 74 Id.  at ¶ 174. See also MICHAEL TREBILCOCK ET. AL., THE R EGULATION OF I NTERNATIONAL TRADE  309 (4 th ed., 2012).

9

The regulatory purpose of the ESC Act is to protect the health security of the children by reducing the exposure of children to lead as the section 2, ESC Act prohibits only those toys which have a lead content of more than 100 p.p.m. 75 Furthermore, the fact that the purpose of the ESC Act is to protect the health security of the children in Zwovka is evident from section 3 of the Act which states that the Act is based on intelligence reports received by the Executive about possible threat to the citizens of Zwovka from the O.A.Z. 76 Hence, it is evident that the ESC Act has been enacted for a legitimate regulatory purpose rather than to modify the conditions of competition to the detriment of the imported products. Since the regulatory purpose of the ESC Act is not protectionist in nature, hence there has  been no violation of Article 2.1 of the TBT Agreement. Also, the regulatory purpose (health security) has been followed with respect to both domestic and imported products, but with different measures. With respect to imported products, the measure adopted has been quality control whereas with respect to domestic products, the measure adopted has been quantity control. The purpose of Article III, GATT is not to prevent contracting parties from differentiating  between different product categories for policy purposes unrelated to the protection of domestic production.77 C. R EGULATORY DISTINCTIONS BETWEEN RIDE-ON TOYS AND DOLLS DO NOT DISTORT THE CONDITIONS OF COMPETITION.

Regulatory distinctions between imported and like domestic products is, in itself, not determinative of whether imported products are treated less favourably within the meaning of Article III:4.78  Rather, what is relevant is whether such regulatory differences distort the conditions of competition to the detriment of imported products. In the domestic market, the regulatory purpose (health security) has been pursued through two measures: I.

Troikan Religious Counsil’s Directive under which only entities specifically licensed can manufacture dolls because of which the number of dolls in the market is regulated. (Only 2 lakh dolls per year 79 as compared to the 50 lakh toys from Enroda in 2011 80).

II.

The Health Act, 2008 under which companies are required to ensure that the fact ory units of the lead emitting industries inside the IZs remain closed to children. 81

75

 ¶ 15, Moot Problem, § 2, Environment and Security of Children Act, 2012 [hereinafter ESC Act, 2012].  ¶ 15, Moot Problem, § 3, ESC Act, 2012. 77  GATT Panel Report, U.S. –  Alcoholic and Malt Beverages, ¶ 5.25. 78  Appellate Body Report, Thailand –   Customs and Fiscal Measures on Cigarettes from the Philippines , ¶ 128, WT/DS371/AB/R (July 15, 2011). 79  ¶ 5, Moot Problem. 80  ¶ 9, Moot Problem. 76

10

The conditions of competition in the domestic market are not getting altered as once the rideon toys enter the market; there is no restriction on their sale, purchase or distribution. Hence, section 2, ESC Act is in compliance with Article 2.1 of the TBT Agreement. II. THAT ARTICLE III:4, GATT IS NOT APPLICABLE TO SECTION 2, ESC ACT. 2.1 SECTION 2, ESC ACT IS AFFECTING ‘IMPORTATION OF PRODUCTS’ AND NOT ‘IMPORTED PRODUCTS’ UNDER ARTICLE III:4,

GATT.

Measures affecting the ‘importation’ of products are regulated in Article XI:1, GATT, and those affecting ‘imported products’ are dealt with in Article III, GATT.82 Since section 2, ESC Act, which imposes an import ban on ride-on toys which have a lead content of more than 100 ppm, 83  is a border measure,  Ad   Article III, GATT is the ‘pivotal factor’84 in determining whether section 2, ESC Act is a measure affecting ‘importation of  products’ or ‘imported products’.  Ad   Article III entails three conditions for a measure to fall under Article III, GATT: I.

the measure must apply equally (the regulations applicable to domestic and foreign  products lead to the same result)85 to domestic and imported products;

II. III.

the domestic and imported products must be like; and the measure must be enforced at the time or point of importation. 86

Section 2, ESC Act applies only to imported products from Zwovka, it doesn’t fulfill the Condition I mentioned above. Condition I implies that the same regime must apply to the imported product and the domestic product 87  for the application of Article III, GATT. Different measures can apply to domestic and imported products as long as they are part of the same regime.88 But in the present dispute, even the entire regime, i.e. the ESC Act is not

81

 ¶ 8, Moot Problem.  Report of the Panel, Canada –   Administration of the Foreign Investment Review Act , ¶ 5.14, L/5504 (Feb. 7, 1984), GATT B.I.S.D. (30th Supp.) at 140 (1985). See also Pauwelyn,  Rien ne va Plus: Distinguishing  Domestic Regulation from Market Access in GATT and GATS  4 WORLD TRADE R EV. 131, 133-134 (2005). 83  ¶ 15, Moot Problem. 84  Pauwelyn,  Rien ne va Plus: Distinguishing Domestic Regulation from Market Access in GATT and GATS , 4 WORLD TRADE R EV. 131, 142 (2005). 85   Panel Report,  E.C.  –   Asbestos, ¶ 8.92. See also R. Hudec, The Product-Process Doctrine in GATT/WTO  Jurisprudence, in NEW DIRECTIONS IN I NTERNATIONAL ECONOMIC LAW: ESSAYS IN HONOR OF J.H. JACKSON 191-199 (M. Bronckers et al. eds., 2002). 86  Robert Stelzer, GATT Doctrine and the Limits of the WTO: An Investigation into Germany's Stem Cell Act, 42(5) J. WORLD TRADE 877 (2008). 87  Panel Report, E.C. –  Asbestos, ¶ 8.91-8.92. 88  GATT Panel Report, U.S. – Section 337, ¶ 5.10. 82

11

applicable to ‘like’ domestic products as the entire Act also applies to only imported  products.89 Therefore, section 2, ESC Act is a restriction covered by Article XI: 1, GATT. III. THAT ARTICLE XI, GATT IS NOT APPLICABLE TO SECTION 2, ESC ACT.

Under Article XI:1 GATT, there shall be no prohibitions or restrictions whatsoever on importation, other than duties etc., no matter how they are made effective. 90 3.1 THERE

IS A DIRECT CONFLICT BETWEEN

AND HENCE SECTION

2, ESC ACT

ARTICLE XI, GATT  AND TBT AGREEMENT

SHOULD BE ANALYSED ONLY UNDER THE

TBT

AGREEMENT.

The General Interpretative Note to Annex 1A to the WTO Charter provides that in the event of conflict between a provision of the GATT and a provision of another agreement in Annex 1A to the Agreement establishing the WTO, the provision of the latter shall prevail over the former, to the extent of the conflict.” 91 In international law, a conflict exists when two treaty instruments contain obligations which cannot be complied with simultaneously. 92 In the WTO context, this definition of a conflict was confirmed in Guatemala-Cement.93 Furthermore, in  E.C.  –   Bananas 94  and  Indonesia  –  95  Autos , it was held that for the provisions to conflict, the provisions must impose ‘mutually

exclusive’ obligations. Article XI prohibits quantitative restrictions and allows only tariff restrictions,96 whereas the TBT Agreement explicitly authorizes members to lay down product characteristics or their related processes and production methods, 97  which when complied with, can result into quantitative restrictions.98 Any quantitative prohibition or restriction is a prima facie violation

89

 ¶ 15, Moot Problem, § 1, ESC Act, 2012.  Report of the Panel,  Japan –   Trade in Semi-Conductors, ¶ 104, L/6309 (May 4, 1998), GATT B.I.S.D. (35th Supp.) at 116 (1999). 91  A NNEX 1A, MULTILATERAL AGREEMENTS O N TRADE I N GOODS, General Interpretative Note to Annex 1A , 21, http://www.wto.org/english/docs_e/legal_e/05-anx1a.pdf (last visited Jan. 3, 2013). 92  V ILLIGER ,  supra note 12, at 402. See also Karl Wolfram, Conflict Between Treaties, in 7 E NCYCLOPEDIA O F PUBLIC I NTERNATIONAL LAW 468 (Berhardt ed., 1984); Wilfred Jenks, The Conflict of Law Making Treaties , 29 BRIT. Y.B. I NT’L L. 401 (1953); E.W. Vierdag, The Time of the “Conclusion” of a Multilateral  Treaty: Article 30 of the Vienna Convention on the Law of Treaties and Related Provisions , 64 BRIT. Y.B. I NT’L L. 100 (1988); OPPENHEIM’S I NTERNATIONAL LAW, supra note 25, at 1280. 93  Appellate Body Report, Guatemala –  Anti Dumping Investigation regarding Portland Cement from Mexico , ¶ 65, WT/DS60/AB/R (Nov. 2, 1998). 94 Panel Report,  European Communities  –   Regime for the Importation, Sale and Distribution of Bananas , (¶¶7.157 – 7.163), WT/DS27/R/GTM, WT/DS27/R/HND (May 22, 1997). 95   See Panel Report,  Indonesia  –   Certain Measures Affecting the Automobile Industry, WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R (July 2, 1998) [hereinafter Panel Report,  Indonesia –   Autos]. 96  GATT art. XI:1. 97  TBT Agreement annex. 1: 1. 98  Appleton, supra note 1, at 4. 90

12

of Article XI, GATT 99  whereas TBT Agreement allows for a variety of quantitative restrictions like non-automatic licensing which is prohibited under Article XI, GATT. Since the TBT Agreement and Article XI, GATT are mutually exclusive, the TBT Agreement should apply to the exclusion of Article XI, GATT. 3.2 A RGUENDO , ARTICLE 2, TBT AGREEMENT IS L E X S PE C I A L I S TO   ARTICLE XI, GATT.

The provisions of the TBT Agreement referring to technical regulations which may constitute quantitative restrictions are lex specialis in respect of Article XI, GATT. 100 Article 30, V.C.L.T., which talks about the application of successive treaties relating to the same subject-matter, does not express itself on the rule of lex specialis derogat legi  generali.101  However, to the extent that this rule pertains to customary law, it continues to exist independently alongside Article 30, V.C.L.T.102 In Korea-Government Procurement , the Panel has laid down that in the absence of any clause in the W.T.O. agreements excluding customary international law, the latter is relevant.103 The provision governing the relationship between the TBT Agreement and the GATT, as far as trade restrictions are concerned, is Article 2.5, TBT Agreement according to which, it is to  be presumed that a technical regulation that is prepared for a legitimate objective under the TBT Agreement and is in accordance with relevant international technical standards-both criteria apply cumulatively-does not constitute an unjustifiable obstacle to international trade104 even if it imposes quantitative restrictions. Since it has already been established that section 2, ESC Act is a technical regulation having a legitimate objective, hence, an analysis under Article XI, GATT should not be conducted  because Article 2, TBT Agreement is lex specialis to Article XI, GATT. IV. THAT SECTION 2, ESC ACT IS CONSISTENT WITH ARTICLE 2.2, TBT AGREEMENT.

Section 2, ESC Act is necessary for the protection of human life or health and the protection of environment.

99

  Panel Report, Canada  –   Periodicals, ¶ 5.5. See also Robert Stelzer, GATT Doctrine and the Limits of the WTO: An Investigation into Germany's Stem Cell Act , 42(5) J. WORLD TRADE 875 (2008). 100  WILLIAM J. DAVEY, E NFORCING WORLD TRADE R ULES 331 (2006). 101 Mavrommatis Palestine Concessions case, P.C.I.J. Series A, No. 2 (1924) p. 31. 102 VILLIGER , supra note 12, at 409. 103  Panel Report,  Korea –   Measures Affecting Government Procurement , ¶ 7.96, WT/DS163/R (May 1, 2000). See Appellate Body Report,  E.C. –   Measures Concerning Meat and Meat Products (Hormones), ¶¶ 123 – 125, WT/DS26/AB/R, WT/DS48/AB/R, Jan. 16, 1998 [hereinafter Appellate Body Report,  E.C. –  Hormones]. 104  TBT Agreement art. 2; WTO — TECHNICAL BARRIERS AND SPS MEASURES, supra note 2, at 59.

13

Article 2.2, TBT Agreement, which is a substantive provision, 105  requires that technical regulation must not have an effect of creating unnecessary barriers to international trade. In order for the regulation to not create an unnecessary barrier to international trade, it essentially should not be more trade restrictive than necessary to fulfill the legitimate objectives.106 4.1 SECTION 2, ESC ACT

IS NECESSARY FOR THE PROTECTION OF HUMAN HEALTH AND

ENVIRONMENT.

4.1.1 AN

ANALYSIS OF ‘NECESSARY’  INCLUDES ‘REASONABLE ALTERNATIVE’  TEST AND

‘WEIGHING AND BALANCING’ TEST.

As already mentioned, Article 2.1, TBT Agreement has to be interpreted in the context of GATT provisions. 107 The same applies with respect to Article 2.2, TBT Agreement. 108 ‘Necessary’ in Article XX, GATT reflects the ‘minimum derogation principle’.109 In United States – Section 337 , the panel said that the

condition

of

necessity

depends on an

examination of whether a satisfactory and reasonable alternative exists which is not inconsistent with other GATT provisions. 110 However, when a GATT consistent measure is not reasonably available, the measure which entails the least degree of inconsistency with other GATT provisions must be used. 111 Furthermore, under the ‘weighing and balancing’ test, laid down by the Appellate Body in  Korea-Beef , the following three factors need to considered: I. II.

the contribution made by the measure to the fulfillment of policy objectives, the importance of the common interests or values protected by that law or regulation,

III.

the accompanying impact of the law or regulation on imports or exports. 112

105

 PETER VAN DEN BOSSCHE ET AL., MAASTRICHT FACULTY OF LAW WORKING PAPER , supra note 1, at 14.  TBT Agreement art. 2.2. 107 See supra Part 1.3.2. 108  PETER VAN DEN BOSSCHE ET AL., MAASTRICHT FACULTY OF LAW WORKING PAPER , supra note 1, at 18. 109  Appellate Body Report, U.S. –   Gasoline , 27; Report of the Panel, United States  –   Restrictions on import of Tuna, GATT Doc. DS 29/R, June 16, 1994, reprinted in 33 I.L.M. 839 (1994); Report of the Panel, Canada  –   Measures Affecting Exports Of Unprocessed Herring And Salmon,  ¶¶ 4.4-4.7 (Nov. 20, 1987) L/6268, GATT th B.I.S.D. (35  Supp.) at 98; See also GATT Panel Report, U.S. – Section 337 , ¶¶ 5.25-5.27. 110   GATT Panel Report, U.S.  –  Section 337 ,  ¶ 5.26; Working Party on Domestic Regulation,  Note by the Secretariat: "Necessity Tests" in the WTO, S/WPDR/W/27, (Dec. 2, 2003). 111  Id . See also Report of the Panel, Thailand –  Restrictions on importation of and Internal Taxes on Cigarettes, th (Oct. 5, 1990) DS10/R, GATT B.I.S.D. (37  Supp.) at 200; Panel Report, U.S. –  Gasoline, 26. 112   Appellate Body Report,  Korea  –  Beef, ¶ 164; P ETER VAN DEN BOSSCHE, THE LAW AND POLICY OF THE WORLD TRADE ORGANIZATION 633 (2005) [hereinafter PETER VAN DEN BOSSCHE]; WTO – TRADE IN GOODS, 513, (Rudiger Wolfrum et al. eds., 2007) . 106

14

The reasonable availability of an alternative depends on weighing and balancing of these factors.113 The determination of whether a suggested alternative measure is ‘reasonably available’ also depends on the difficulty in implementation of the alternate measure. 114 As per the tests of ‘reasonable alternative’ and ‘weighing and balancing’, Section 2, ESC Act is necessary for protection of human health and environment under Article 2.2, TBT Agreement. A. SECTION 2, ESC ACT IS NECESSARY FOR THE PROTECTION OF HUMAN HEALTH. A1. THE

CONTRIBUTION OF THE SECTION

2, ESC ACT

TO THE PROTECTION OF HUMAN

HEALTH IS SIGNIFICANT.

A contribution exists when there is a genuine relationship of ends and means between the objective pursued and the measure at issue. 115 The end sought to be achieved through section 2, ESC Act is the protection of health security of children and the means adopted is ‘qualitative restriction’ on the amount of lead allowed in the ride-on toys. In 2010 and 2011, Enroda exported 4 million and 5 million units respectively of the ride-on toys to Zwovka. 116 These toys are popular among children between 3-6 years of age 117 who are more prone to lead poising because of ingestion of toxic material because they have a greater tendency of licking and swallowing the toys. 118 These ride-on toys are used by people of Eskron faith also and are not limited to people of Troikan faith. Three out of ten sample consignments that were examined contained 600 p.p.m. of lead and seven contained 150-300  p.p.m. of lead 119 and hence there was a need to have a qualitative restriction on them. Section 2, ESC Act restricts the amount of lead to 100 p.p.m. and thus makes a very significant contribution to the protection of human life and health.

A2. THE PROTECTION OF HUMAN HEALTH IS AN EXTREMELY IMPORTANT VALUE.

In the present dispute, the objective pursued by the measure is the preservation of human health through reduction of the well-known, and life-threatening, health risks posed by

113

 Appellate Body Report,  Korea – Beef, ¶ 166; Appellate Body Report,  E.C. –  Asbestos, ¶ 172.   Appellate Body Report,  Korea  –  Beef, ¶¶ 163-166; Laurent A. Ruessmann,  Putting the Precautionary  Principle in its Place: Parameters for the Proper Application of a Precautionary Approach and the Implications  for Developing Countries in Light of the Doha WTO Ministerial , 17 AM. U. INT’L L. REV. 905, 915 (2005). 115  Appellate Body Report,  Brazil –   Measures Affecting Imports Of Retreaded Tyres, ¶ 145, WT/DS332/AB/R (Dec. 3, 2007) [hereinafter Appellate Body Report,  Brazil – . Retreaded Tyres]. 116  ¶ 9, Moot Problem. 117  Id . 118 See TECHNICAL COMMITTEE ISO/TC181, ISO 8124-3:2010, S AFETY OF TOYS - PART 3: MIGRATION OF CAERTAIN ELEMENTS (2010), . 119  ¶ 14, Moot Problem. 114

15

lead.120  This value pursued has been recognized as both vital and important in the highest degree.121 A3. THE IMPACT OF SECTION 2, ESC ACT ON THE IMPORTS FROM ENRODA IS NOT SEVERE.

I. Section 2, ESC Act does not lay down any quantitative rest riction. Zwovka will import toys from Enroda as long as they comply with the product characteristic mentioned in it.122 II. Section 2, ESC Act is more lenient than the international standard which allows for only 90ppm of lead in toys meant for children below 6 years of age. 123 In order to assess the necessity of a measure, risks that non fulfillment create have to be taken into account 124  and the degree of restrictiveness should be proportional to the risk of nonfulfillment of the legitimate objectives.125 The consequences of brain injury from exposure to lead in early life are loss of intelligence, shortening of attention span and disruption of  behaviour.126  At high levels, lead can cause permanent brain damage and death. 127  These effects are untreatable and irreversible.128 The more vital or important the common interests or values pursued, the easier it is to accept as ‘necessary’ measures designed to achieve those ends.129As weighing and balancing is a holistic operation that involves putting all the variables of the equation together and evaluating them in relation to each other after having examined them individually, 130 section 2, ESC Act is necessary to protect human health.

120

  Michael J. Kosnett et al.,  Recommendations for Medical Management of Adult Lead Exposure , 115(3) E NVIRON. HEALTH PERSPECT. 463, 465 (2007). 121  Appellate Body Report,  E.C. –  Asbestos, ¶ 172. 122  ¶15, Moot Problem, § 2, ESC Act, 2012. 123  Supra note 118. 124  TBT Agreement art. 2.2. 125  J OEL P. TRACHTMAN, THE I NTERNATIONAL ECONOMIC LAW R EVOLUTION AND THE R IGHT TO R EGULATE  99 (2006). 126 WORLD HEALTH ORGANISATION, CHILDHOOD LEAD POISONING 12 (2010); Theodore I. Lidsky and Jay S. Schneider,  Lead Neurotoxicity in Children: Basic Mechanisms and Clinical Correlates , 126(1) BRAIN  5, 9 (2003). 127  Robert V. Percival, Who's Afraid of the Precautionary Principle? , 23(1) PACE E NVTL. L. R EV. 18 (2005-06). 128  Id . Childhood Lead Poisoning,  supra note 126, at 12. 129  Appellate Body Report,  Korea – Beef, ¶ 172. 130  Appellate Body Report,  Brazil – . Retreaded Tyres, ¶ 182.

16

A4. A ‘REASONABLE ALTERNATIVE MEASURE’ IS NOT AVAILABLE.

The burden is on Enroda to show the existence of a reasonable alternate measure which is less trade restrictive.131 In order to qualify as an alternative, a measure must not only be less trade restrictive than the measure at issue, but should also preserve a Member’s right to achieve its desired level of protection with respect to the objective pursued. 132  The desired level of protection is the minimization of children’s exposure to lead. The restrictions that can be imposed to achieve this level of protection are qualitative or quantitative restrictions. Zwovka has adopted qualitative restrictions as they are less trade restrictive than quantitative restrictions. B. SECTION 2, ESC ACT IS NECESSARY FOR THE PROTECTION OF ENVIRONMENT.

Lead paints are a major threat to the environment. They become a concern when they chip, turn into dust, or get into the soil. 133 B1. THE

CONTRIBUTION OF THE SECTION

2, ESC ACT

TO THE PROTECTION OF

ENVIRONMENT IS SIGNIFICANT.

The number of toys imported from Enroda was 4 million and 5 million in 2010 and 2011 respectively.134  Since the number of toys getting regulated by Section 2, ESC Act is very large, it is obvious that it will prevent a significant quantity of lead from getting added into the soil. B2. THE PROTECTION OF ENVIRONMENT IS AN EXTREMELY I MPORTANT VALUE.

The preamble to the WTO Agreement acknowledges that the rules of trade should be ‘in accordance with the objective of sustainable development’, and should seek to ‘protect and  preserve the environment’.135  The Appellate Body has previously agreed that protection of the environment is an important value. 136  The Doha Ministerial Declaration (2001) too contained a specific chapter on ‘trade and environment’. 137 B3. THE IMPACT OF SECTION 2, ESC ACT ON THE IMPORTS FROM ENRODA IS NOT SEVERE.

131

  Appellate Body Report, United States  –   Measures Affecting The Cross-Border Supply Of Gambling And  Betting Services, ¶ 311, WT/DS4/AB/R (Apr. 7, 2005) [hereinafter Appellate Body Report, U.S. –   Gambling ]; Appellate Body Report, Brazil – . Retreaded Tyres, ¶ 156. 132  Appellate Body Report, U.S. –  Gambling , ¶ 308. 133 U NITED STATES E NVIRONMENTAL PROTECTION AGENCY, TESTING YOUR HOME FOR LEAD IN PAINT, DUST, A ND SOIL 1 (2000). 134  ¶ 9, Moot Problem. 135  Appellate Body Report, United States - Import Prohibition of Certain Shrimp and Shrimp Products , ¶ 129, WT/DS58/AB/R (Oct. 12, 1998) [ hereinafter Appellate Body Report, U.S. –  Shrimp]. 136  Appellate Body Report,  Brazil – . Retreaded Tyres, ¶ 17. 137   Kevin C. Kennedy, The Status of the Trade-Environment-Sustainable Development Triad in the DOHA  Round Negotiations and in Recent U.S. Trade Policy, 19 I ND. I NT'L & COMP. L. R EV. 529 (2009).

17

As already mentioned, the impact of section 2, ESC Act is not severe. 138 The section 2, ESC Act places qualitative restrictions on ride-on toys. However, after considering the importance of protection of environment as a value and the contribution of section 2, ESC Act towards achieving it, it can be concluded that on weighing and balancing the section 2, ESC Act is a measure necessary for the protection of environment. B4. A ‘REASONABLE ALTERNATIVE MEASURE’ IS NOT AVAILABLE.

The burden of proof is on Enroda to show the existence of a reasonable alternate measure which is less trade restrictive.139 As already mentioned, the least trade restrictive alternative has been used.140 4.2 THE APPLICATION OF SECTION 2, ESC ACT DOES NOT VIOLATE THE SIXTH RECITAL OF THE PREAMBLE, TBT AGREEMENT.

As already mentioned, Articles 2.1 and 2.2, TBT Agreement have to be interpreted in the context of GATT provisions. 141 The same applies to sixth recital of the TBT Preamble which has to read in the context of the introductory clause (chapeau) of Article XX, GATT. The Appellate Body in U.S.-Gasoline has observed that the chapeau addresses the manner in which that measure is applied rather than the measure itself. 142 The purpose and object of the chapeau of Article XX is the prevention of abuse of the exceptions 143 and it is a safeguard against the doctrine of abus de droit .144 The discrimination in the sixth recital of the Preamble must necessarily be different from the discrimination talked about in article 2.1. 145 4.2.1 SECTION 2, ESC ACT

DOES

NOT

CREATE

UNJUSTIFIABLE

AND

ARBITRARY

DISCRIMINATION.

The Black’s Law Dictionary defines ‘arbitrary’ as ‘founded on prejudice or preference rather than on reason or fact’. Also, in U.S.-Shrimp (Article 21.5 –   Malaysia), the Panel considered the ordinary meaning of the word ‘arbitrary’ to be ‘capricious, unpredictable, inconsistent’. 146

138

See supra Part 4.1.1 A3.  Appellate Body Report, U.S. –  Gambling , ¶ 311; Appellate Body Report,  Brazil – . Retreaded Tyres, ¶ 156. 140 See supra Part 4.1.1 A4. 141 See supra Part 1.3.2 (Article 2.1,TBT Agreement) and  supra Part 3.1.1 (Article 2.2, TBT Agreement). 142   Appellate Body Report, US  –   Gasoline ,  p.23; Report of the Panel, United States  –   Imports of Certain th  Automotive Spring Assemblies, ¶ 56 (June 11, 1982) L/5333, GATT B.I.S.D. (30   Supp.) at 107 [hereinafter GATT Panel Report, U.S. –  Automotive Spring ]. 143  Appellate Body Report, U.S. –   Gasoline , 22; GATT Panel Report, US –   Automotive Spring , ¶ 116; WTO –  TRADE IN GOODS, supra note 112, at 466; P ETER VAN DEN BOSSCHE, supra note 112, at 616. 144  Appellate Body Report, U.S. –  Shrimp, ¶ 116. 145  Appellate Body Report, U.S. –  Gasoline , 23; PETER VAN DEN BOSSCHE, supra note 112, at 618. 146   Panel Report, United States  –   Import Prohibition of Certain Shrimp and Shrimp Products - Recourse to  Article 21.5 by Malaysia, ¶¶ 5.138 –  5.144, WT/DS58/RW (June 15, 2001). 139

18

The term ‘unjustifiable’ means not justifiable or indefensible 147. Justifiable means ‘able to be legally or morally justified; excusable; defensible. 148  Read in the context of the chapeau of Article XX, these definitions suggest, overall, the need to be able to defend or convincingly explain the rationale for any discrimination in the application of the measure. The discrimination in the present dispute results from the fact that dolls have religious value for the people of Zwovka. The T.R.C. Directive already places restriction on the production of dolls in the sense that only those artisans and entities that have been specifically licensed  by the TRC can produce these dolls. 149 This way the number of dolls containing lead paints is  being restricted. Therefore, there is a reasonable explanation for the discriminatory application of section 2, ESC Act. 4.2.2 SECTION 2, ESC ACT IS NOT A DISGUISED RESTRICTION ON INTERNATIONAL TRADE.

A measure would be ‘a disguised restriction on international trade’ if its design, architecture or structure reveals that it does not pursue the legitimate policy objective on which the  provisional justification was based but, in fact, pursues trade-restrictive, i.e. protectionist, objectives.150 The very title of the ESC Act denotes that the Act is for protection of environment and for the security of children.151  Section 2, ESC Act applies on all imported toys irrespective of the countries they are produced in. Therefore, it is not a disguised restriction on international trade. 4.2.3 THERE IS NO DUTY TO NEGOTIATE ON ZWOVKA.

The chapeau contains no general duty to negotiate and this can be seen from the fact that no WTO Appellate Body decision considering measures under specific paragraphs that use the term ‘necessary’ has found an obligation to negotiate under either the specific paragraph or the chapeau of GATT. 152 The duty to negotiate is present only in ‘relating to’ disputes, where the least trade restrictive analysis has not already been done. 153 147

OXFORD ADVANCED LEARNER ’S DICTIONARY OF CURRENT E NGLISH 1675 (7th  ed., 2005); Panel Report,  Brazil  –   Measures Affecting Imports Of Retreaded Tyres, ¶ 7.295, WT/DS332/R, June 12, 2007 [hereinafter Panel Report, Brazil –  Retreaded Tyres]. 148  BLACK ’S LAW DICTIONARY 994 (9th ed., 2009). 149  ¶ 4, Moot Problem. 150   Panel Report, United States  –   Import Prohibition of Certain Shrimp and Shrimp Products - Recourse to  Article 21.5 by Malaysia, ¶¶ 5.138  –   5.144, WT/DS58/RW, June 15, 2001; P ETER VAN DEN BOSSCHE, supra note 112, at 618. 151  ¶ 15, Moot Problem. 152  Bradly J. Condon, The Existence of a Duty to Negotiate in the General Exceptions of GATT and GATS April 14, 2005, at 9, 153 See Omar R. Akbar, The “Necessary” Connection Between the Duty to Negotiate and Least Restrictive  Measures Analysis: The Gambling Dispute Reconsidered   (Jean Monnet Ctr. For Int’l and Regional Eco. Law and Justice, Working Paper No. 03/07).

19

Therefore, the duty to negotiate does not exist under Preamble, TBT Agreement. Hence, Section 2, ESC Act doesn’t violate the sixth recital of the Preamble, TBT Agreement. V. THAT SECTION 3, ESC ACT IS NOT A TECHNICAL REGULATION AND HENCE, IS GOVERNED BY GATT. 5.1 ARTICLE 2, TBT AGREEMENT DOES NOT APPLY TO SECTION 3, ESC ACT.

The three essentials of a technical regulation have already been mentioned. 154 A blanket ban on certain products falls outside the definition of technical regulation if it stipulates no criteria by which such products may be admitted. 155 Section 3, ESC Act restricts the import of all ride-on toys from Enroda for an interim period of 12 months. 156 In this section no product characteristic is mentioned and it is a general ban on imports from Enroda and therefore not a technical regulation. Hence, Article 2, TBT Agreement is not applicable to Section 3, ESC Act. Therefore, section 3, ESC Act is governed by GATT provisions and not by the TBT Agreement. 5.2 SECTION 3, ESC ACT IS JUSTIFIED UNDER ARTICLE XXI, GATT.

Article XXI, GATT is a self- judging clause and hence is not subject to the review of the WTO Panel in order to verify the validity of the invocation of the Security Exception. 5.2.1 ARTICLE XXI, GATT IS A SELF JUDGING CLAUSE.

The implication of the phrase ‘it considers’ used in Article XXI, GATT is that no WTO panel or other adjudicatory body has any right to determine whether a measure taken by a sanctioning member satisfies the requirements.157 It essentially suggests that every country is the sole judge on questions relating to its own security. 158  Therefore, the necessity of

154

 See supra Part 1.1.   Appellate Body Report,  E.C.  –   Asbestos,  ¶ 71; Jan McDonald,  Domestic Regulation, Harmonization, and Technical Barriers to Trade, 4 WORLD TRADE R EV. 249 (2005). 156  ¶ 15, Moot Problem, § 3, ESC Act, 2012. 157   Roger P. Alford, The Self-Judging WTO Security Exception , 3 UTAH L. R EV. 697, 706 (2011); Raj Bhala,  National Security and International Trade Law: What the GATT Says, and What the United States Does , 19 U. PA. J. I NT’L ECON. L. 263, 268 – 69 (1998); See also Andrew Emmerson, Conceptualizing Security Exceptions:  Legal Doctrine or Political Excuse, 11 J. I NT’L ECON. L. 135, 142 – 43 (2010); Richard Sutherland Whitt, The  Politics of Procedure: An Examination of the GATT Dispute Settlement Panel and Article XXI Defense in the Context of the U.S. Embargo of Nicaragua , 19 LAW & POL’Y I NT’L BUS. 603, 616 (1987). 158 Contracting Parties Decision,  Article XXI - United States Exports Restrictions, CP.3/SR.22, at 7 (June 8, 1949), GATT B.I.S.D. II/28 (2 nd  Supp.) at 28; 1 W ORLD TRADE ORGANISATION, WTO A NALYTICAL I NDEX: GUIDE TO WTO LAW AND PRACTICE 600 (1995). 155

20

invoking such a provision is not left to objective but rather the subjective determination of the State in question.159 Hence, Article XXI, GATT is a self judging clause. A. ARTICLE XXI, GATT  IS

A SELF JUDGING CLAUSE WHEN INTERPRETED ACCORDING TO

ARTICLES 31 AND 32, V.C.L.T.

Interpreting Article XXI, GATT in context (other provisions of the agreement), 160 it appears that the drafters of the GATT intended there to be a distinction between Article XX and XXI.161 If the drafters of the agreement wished to insert a qualification of measures, which the members ‘reasonably consider necessary’, they would have done so. 162 The travaux preparatoires, which is considered the most important supplementary means of interpretation,163 with respect to Article XXI, states that it is the member’s discretion, under the security exception, as to what is necessary to protect their security interests relating to atomic materials, arms traffic, and wartime or other international emergencies. 164  The Chapeau to Article XX, GATT originally applied to the security exception as well since the  provisions of both the provisions ‘were lumped together in one artic le’. 165 The two were later separated during the Geneva drafting sessions, 166 thereby rendering this qualifying paragraph inapplicable to the security exception. 167 B. ARTICLE XXI, GATT  IS

A SELF JUDGING CLAUSE WHEN INTERPRETED ACCORDING TO

THE JURISPRUDENCE AVAILABLE.

The I.C.J. has previously interpreted the ‘it considers’ phrase in the U.S.- Nicaragua case,168 when it examined the treaty language that allowed a national security exception to certain treaty obligations.169 It acknowledged the difference between ‘necessary to protect its essential security interests’ and ‘it considers necessary’ clause. While the former was 159

 Dapo Akande & Sope Williams,  International Adjudication on National Security Issues: What Role for the WTO?, 43 VA. J. I NT’L L. 365, 387 (2003) [hereinafter Akande & Williams,  International Adjudication]; Wesley A. Cann Jr., Creating Standards and Accountability for the Use of the WTO Security Exception: Reducing the  Role of Power-Based Relations and Establishing a New Balance Between Sovereignty and Multilateralism , 26 YALE J. I NT’L. L. 413, 422 (2001) [hereinafter Wesley A. Cann Jr., Creating Standards]. 160  V.C.L.T. art. 31. 161  Wesley A. Cann Jr., Creating Standards, supra note 159, at 422. 162  Akande & Williams, International Adjudication, supra note 159, at 392. 163  VILLIGER , supra note 12, at 445. 164  U.N. Conference on Trade and Employment, Havana, Cuba, Nov. 21, 1947,  An Informal Summary of the ITO Charter , 35, U.N. Doc. E/CONF.2/INF.8. 165  JOHN H. JACKSON, WORLD TRADE A ND THE LAW OF GATT 748 (1969). 166  U.N. Conference On Trade And Employment, Aug. 30, 1947, Second Session Of The Preparatory Committee Of The, (Draft) General Agreement On Tariffs And Trade , , U.N. Doc. E/PC/T/189. 167   Wesley A. Cann Jr., Creating Standards,  supra note 159, at 422; Michael J. Hahn, Vital Interests and the  Law of the GATT: An Analysis of GATT’s Security Exception, 12 MICH. J. I NT’L L. 558, 566-567 (1991). 168 See Military and Paramilitary Activities case (Nicaragua v. U.S.) [1986] I.C.J. Rep. 14, 22 (June 27). 169  Wesley A. Cann Jr., Creating Standards, supra note 159, at 422.

21

observed to be read objectively, the latter mandates a subjective reading; implying the country may take measures that ‘it considers necessary’. Therefore, it can be derived that if the ICJ was faced with reviewing a self-judging clause such as GATT Article XXI, it might have found that it did not have jurisdiction to determine whether measures taken by one of the Parties fell within such an exception.170 A number of decisions drew a distinction between the two phrases and concluded that the latter claus e is self-judging, while the former is not. 171 5.2.2

, A RGUENDO 

ZWOVKA

INVOKED THE SECURITY EXCEPTION UNDER

ARTICLE XXI,

GATT IN ‘GOOD FAITH’.

The element of good faith is to supplement the establis hment of the objective prerequisites of: I. II.

The existence of an essential security interest, and The measure is not protectionist in nature. 172

The good faith review encompasses a determination of whether the member believes that the interests it is seeking to protect are ‘essential security interests’.173 A. AN ‘ESSENTIAL SECURITY INTEREST’ DOES EXIST FOR ZWOVKA.

An ‘essential interest’ is identified by those conditions in which a State is threatened by a serious danger to its political or economic survival or to the possibility of maintaining its essential services in operation.174 However, an essential interest of a state does not mean that the very ‘existence’ of the state must be in danger. 175 The life of children of Zwovka, which is an essential security interest as it threatens the  political survival of Zwovka, is in danger because of an emergency in international relations with Enroda which has been caused by ‘Organization for Anarchy in Zwovka’ (hereinafter referred to as O.A.Z.). A1. AN EMERGENCY IN INTERNATIONAL RELATIONS DOES EXIST FOR ZWOVKA. 170

  Robyn Briese & Stephan Schill,   If the State Considers: Self-Judging Clauses in International Dispute Settlement , 13 MAX PLANCK U. N. Y. B. 61, 98 (2009) [hereinafter Briese & Schill,  If the State Considers]. 171 See CMS Gas Transmission Company v. Argentine Republic, ICSID Case No. ARB/01/8, Decision on Annulment, ¶ 366 (Sep. 25, 2007) , 7 ICSID Rep. 494; LG&E Energy Corp., LG&E Capital Corp., LG&E International Inc. v. The Argentine Republic, ICSID Case No. ARB/02/1, Decision on Liability, ¶ 212 (Oct. 3, 2006); Sempra Energy International v. The Argentine Republic, ICSID Case No.ARB/02/16, Decision on Annulment, ¶¶ 379-85 (Sept. 28, 2007); Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, ICSID Case No. ARB/01/3, Decision on Jurisdiction, ¶¶ 335-339 (May 22, 2007). 172  Briese & Schill, If the State Considers, supra note 170, at 98. 173  Akande & Williams, International Adjudication, supra note 159, at 391. 174  Special Rapporteur,  Addendum - Eighth report on State Responsibility, Int’l Law Comm’n, ¶ 14, U.N. Doc. A/CN.4/318/Add.5-7 (Feb. 29, June 10 & 19, 1980) (by Roberto Ago); See also Stephan Schill,  International  Investment Law and the Host state’s Power to Handle Ec onomic Crises  –   Comment on the ICSID Decision in  LG&E v. Argentina, 24 AM. J. I NT'L ARB. 211, 214 (2007). 175  Special Rapporteur, supra note 174, at ¶ 14.

22

The definition of ‘other emergency in international relations’ has not been clarified by a Panel or Appellate body, however it has been suggested that what it often means is serious international tension.176  Essentially, the threat should be imminent or the security measure should reflect a rapid response and action in order to deal with a dangerous situation that arose suddenly and recently.177 I. O.A.Z. IS A ‘TERRORIST ORGANISATION’.

Terrorist organizations have as their objective the commission,178  or encouragement,179 of terrorist activities. A ‘Terrorist Activity’ constitutes criminal acts intended or calculated to  provoke a state of terror (by endangering the life, physical integrity or freedom of any of  persons in the general public)180 for political purposes. 181 The political purpose of O.A.Z. is ‘to do everything in their capacity to undermine Zwovka’.182 Some of their leaders have been quoted in the local press as arguing that O.A.Z. should destroy the future of Zwovka, indicating that O.A.Z. should not abstain from targeting children, if such is the need of the hour. 183 Since O.A.Z. has as its objective the commission of ‘terrorist activities’ (endangering the life of citizens of Zwovka, especially the children) for the political purpose of destroying Zwovka, it is a ‘terrorist organisation’. II. ZWOVKA IS UNDER AN OBLIGATION TO PROTECT ITS CITIZENS.

Every human being has the inherent right to life and this right shall be protected by law. 184 Terrorism, which threatens the right to life, is a crime that is prohibited under international law185  because it violates  jus cogens  principles.186  Thus, combating terrorism is an erga

176

 Felicity Deane, The WTO, the National Security Exception and Climate Change , 2 CARBON AND CLIMATE L. R EV. 149, 151 (2012); Committee on Regional Trade Agreements,  Note by the Secretariat: Inventory of NonTariff Provisions in Regional Trade Agreements, WTO Doc. WT/REG/W/26 (May 5, 1998). 177  Thomas Cottier & Panagiotis Delimatsis,  Article XIV bis GATS: Security Exceptions, in 3 C OMMENTARIES ON PREAMBLE TO THE TBT AGREEMENT IN WTO — WTO: TRADE IN SERVICES: MAX PLANCK COMMENTARY ON WORLD TRADE LAW 9 (Rudiger Wolfrum et al. eds., 2007). 178  Terrorism Act 2000, § 5 (Eng.); Criminal Code, R.S.C. 1985, c. C-46, § 83 (Can.). 179  Terrorism Act 2000, § 3(5) (Eng.); Randolph N Jonakait, The Mens Rea for the Crime of providing Material  Resources to a Foreign Terrorist Organization, 56 B AYLOR L. R EV. 861, 862 (2004). 180   Organization of African Unity Convention on the Prevention and Combating Terrorism art. 1(3), July 14, 1999, 2219 U.N.T.S. 179. 181 See  G.A. Res. 49/60, U.N. Doc. A/RES/49/60 (Dec. 9, 1994) (‘ Measures to Eliminate International Terrorism’). 182  ¶ 12, Moot Problem. 183  Id . 184 International Covenant on Civil and Political Rights art. 6, Dec. 16, 1966, 999 U.N.T.S. 171. 185 See International Convention for the Suppression of Terrorist Bombings, Dec. 15, 1997, 2149 U.N.T.S. 284; International Convention for the Suppression on the Financing of Terrorism, Dec. 9, 1999, 39 I.L.M. 270; International Convention for the Suppression of Acts of Nuclear Terrorism, Apr. 13, 2005, 2445 U.N.T.S. 89.

23

omnes obligation (obligations owed to the international community as a whole) 187. Section 3, ESC Act, has been enacted to protect the ‘right to life’ of the children of Zwovka which is getting endangered by the ride-on toys from Enroda. 188 A2. ZWOVKA HAS ENACTED SECTION 3, ESC ACT IN GOOD FAITH.

The good faith analysis should be with respect to the Member considering the measure to be necessary for the protection of its essential security interests.189 Consistent with the view that necessity justifies otherwise unlawful conduct only in the most exceptional circumstances, international law requires that the acting State had no alternative but to engage in the unlawful conduct in order to protect its essential interest 190  even if the alternative is much more onerous but which can be adopted without a breach of international obligations. 191 I. ZWOVKA HAS RELIED ON OBJECTIVE EVIDENCE TO REACH THE CONCLUSION ABOUT THE THREAT TO ITS CITIZENS.

I.1 THE

INTELLIGENCE REPORTS AND THE CHECKS ON THE IMPORTS BY THE CUSTOM

OFFICIALS ESTABLISHES THE FACT THAT OAZ IS TARGETING THE CHILDREN OF ZWOVKA.

Section 3, ESC Act, which bans the import of ride-on toys from Enroda for a period of 12 months, is based on intelligence reports received by the executive. 192  Zwovka is under no obligation to reveal the contents of these intelligence reports as it considers that their disclosure would be contrary to its essential security interests. 193 Zwovka has not only relied on these reports but has taken active steps to verify their content. Between December to January, 2012, the customs officials in Zwovka carried out random checks on import of toys from Enroda and found that out of the ten sample consignments examined, three were found to have lead content of 600 p.p.m. 194 Such a high quantity of lead in the ride-on toys clearly establishes the fact that O.A.Z. is targeting the children of Zwovka.

186

 Marjorie M. Whiteman,  Jus Cogens in International Law, with a Projected List , 7 GA. J. I NT’L & COMP. L. 609, 625-26 (1977). 187  Case Concerning the Barcelona Traction Light and Power Co., (Belg. v. Spain) [1970] I.C.J. 32 (2 nd phase) (Feb. 5). 188  ¶ 15, Moot Problem, § 3, ESC Act, 2012. 189 . Briese & Schill, If the State Considers, supra note 170, at 68. 190 See also  Special Rapporteur,  supra note 174; Roman Boed, State of Necessity as a Justification for  Internationally Wrongful Conduct , 3 YALE HUM. R TS. & DEV. L.J. 1, 17 (2000). 191  Special Rapporteur, supra note 174, at ¶ 14. 192  ¶ 15, Moot Problem, § 2, ESC Act, 2012. 193  GATT art. XXI (a). 194  ¶ 14, Moot Problem.

24

I.2 NEWSPAPER

ARTICLES AND STATESECRETS.COM CABLES CORROBORATE THE FACT

THAT OAZ IS TARGETING THE CHILDREN OF ZWOVKA.

Firstly, on December 11, 2011, the newspaper, Heritage of Zwovka, published an article titled “O.A.Z. targets our children” in which

it was said that O.A.Z. was directing its

members and sympathizers in the toy industry to coat toys exported to Enroda with extra levels of lead based paint. This report corroborates the fact findings of the intelligence reports received by the Zwovkan government. It was held in the I.C.J. Judgment in the  Nicaragua case that newspaper reports can be used as corroborating evidence. 195  Furthermore, the W.T.O. Panels have admitted newspaper reports as evidence in various cases. 196 The Panel has a duty to examine all evidence brought  before it under Article XI, DSU.197  Hence, the Panel must give due consideration to the newspaper report as corroborating evidence. The fact that the newspaper has an accuracy rating of 35 according to MEDIAWATCH 198 is irrelevant as MEDIAWATCH is not a government authorized body and its criteria to establish accuracy are not clear. Newspaper accuracy surveys also include errors like typographic, spelling errors and inaccurate headline errors 199  which are all objective errors and do not affect the truth or the substance of t he news. Therefore, Zwovka has enacted section 3, ESC Act in good faith as it has relied on objective evidence before taking any steps which are in violation of GATT provisions. Hence, section 3, ESC Act is justified by Article XXI, GATT.

195

 Military and Paramilitary Activities case (Nicaragua v. U.S.) [1986] I.C.J.Rep. 14, 41 (June 27).  Panel Report,  Indonesia –   Autos, ¶ 14.234; Panel Report,  Australia –   Subsidies Provided To Producers And  Exporters Of Automotive Leather , ¶ 9.65, WT/DS126/R (May 25, 1999); Appellate Body Report, United States  –  Import Measures on Certain Products from the European Communities , ¶¶ 6.31-6.34, WT/DS165/AB/R (Dec. 11, 2000). 197  Appellate Body Report,  E.C. –  Hormones, ¶ 133. 198  ¶13, Moot Problem. 199   William B. Blankenburg,  News Accuracy: Some Findings on the Meaning of Errors, 20 T HE JOURNAL OF COMMUNICATION 831 (1970). 196

25