Proportionality: WTO Law: In Comparative Perspective

Abstract

I. INTRODUCTION Proportionality, necessity and balancing are discussed in the context of the World Trade Organization (WTO). We find these tests at prominent places in the GATS and the GATT, as well as in the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) and the Agreement on Technical Barriers to Trade (TBT Agreement). The meaning of these tests and their interrelationship is always clear. There is considerable controversy among participants at the diplomatic, policy, treaty-making, or the dispute settlement level, who put different meanings into the different tests and concepts. The discussion among scholars is often influenced by a projection of national meanings and discourses in the WTO and GATS context. The liberalisation of trade in goods and services requires that the meaning of and the relationship between these tests are clarified. In this article we set out a comparative approach for doing so at a general WTO level, but this approach is particularly relevant in the context of the GATS and the liberalisation of trade in services. In the WTO, as in any other legal and political system, value choices are reflected in the legal order. The fundamental question in this respect is which institution should be competent to make those choices and how this should be done.' It may be that this is a task for the legislator, the courts, or for both. In those cases where courts and tribunals review the actions of other bodies, they usually face value choices in many different ways. That applies to the review of legislation and administrative action in domestic law. It also applies to the review of the compliance of states with international law obligations. The legal solutions and techniques for dealing with these issues will often be similar, but there is also considerable variation. Our focus is on the role of proportionality and balancing in the dispute settlement system of the WTO. Proportionality is a prominent legal principle in many legal orders, and all legal systems have to undertake different forms of balancing, both in determining the content of rules and in their application.2 Proportionality has a major impact at the national level, in federal-type legal systems, and in international law. It also serves to control the discretion exercised by domestic authorities and to limit the interference with, or the restriction of, individual rights of citizens. It is a key legal concept to assist with the trading-off of competing values. These issues also arise in the context of WTO law, particularly in the context of the reconciliation of trade and non-trade issues. WTO lawyers have discussed the role of the principle of proportionality in the WTO legal order for several years. In 2001, Axel Desmedt published a rather full analysis in an article on proportionality in WTO law, and there have been a considerable number of other publications dealing with the same or related issues.' Desmedt's overall conclusion is that there is not one single overarching (unwritten) proportionality principle in WTO law.4 Other authors have similarly concluded that there is neither a general proportionality requirement in WTO law, nor has such a general test been applied by the WTO tribunals. The main argument advanced against proportionality is that the WTO is institutionally ready for such a fundamental balancing of values and interests (mainly economic versus noneconomic), and that such balancing is at the core of the proportionality analysis.5 Marceau and Trachtman point to some additional reasons for skepticism against balancing and proportionality in the WTO: To many commentators, the idea of balancing tests in contexts where domestic regulation is subject to international scrutiny has been anathema to judicial restraint and national sovereignty .... There are two likely reasons. First, balancing tests seem to some to accord too much power to courts. …