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A Moral Stretch? US–Tariff Measures and the Public Morals Exception in WTO Law

Published online by Cambridge University Press:  01 December 2021

Christian Delev
Christian Delev*
Affiliation:
St Catharine's College, University of Cambridge, Cambridge, UK
*
Email: cpd29@cam.ac.uk
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Abstract

The ‘public morals’ exception remains a key aspect of the international trade system; however, its outer bounds have never been precisely defined. This question became pertinent in the US–Tariff Measures panel report, which expansively read the exception to justify a wide range of economic interests, including prohibitions on economic espionage, anti-competitive behaviour, and the regulation of government takings. This note challenges the panel's interpretation, arguing that it is flawed and essentially amounts to a factual standard of review. It proposes an alternative approach to public morals review, which involves an objective standard of review of facts and law, while providing adequate deference to Members’ own factual determinations. It further engages with the issue of extraterritoriality, defending an approach based on Members’ legislative jurisdiction as this strikes a balance between Members’ right to regulate trade for moral purposes and the interests of the international community.

Keywords

World Trade Organizationpublic morals exceptionright to regulate tradedispute settlementextraterritoriality

Information

Type
Research Note
Information
World Trade Review , Volume 21 , Issue 2 , May 2022 , pp. 249 - 260
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

1. Introduction

The right to regulate trade for public moral reasons is an embedded feature of the international trade system.Footnote 1 Its significance has been established before the WTO Appellate Body and panels, which have applied the exception to justify measures pursuing largely social objectives, including the prevention of ‘organized crime’, ‘money laundering’ and ‘pathological gambling’,Footnote 2 the protection of ‘seal welfare’,Footnote 3 the protection of ‘cultural goods’,Footnote 4 even bridging a Member's ‘digital divide’, and promoting ‘social inclusion’.Footnote 5 Yet, the outer bounds of the content of ‘public morals’ have never been discerned.

In the US–Tariff Measures report, the limits of the ‘public morals’ exception were explored. The dispute concerned discriminatory tariff measures applied by the United States (US) to products imported from China. In March 2018, the US Trade Representative published its Section 301 US Trade Act 1974 investigation findings on whether Chinese ‘law, policies, practices, or actions … may be unreasonable or discriminatory’, and harmful to ‘American intellectual property rights, innovation, or technology development’.Footnote 6 Consequently, the US adopted ad valorem tariff rate increases of 25% targeting 818 tariff sub-headings on 20 June 2018.Footnote 7 Additional ad valorem tariff rate increases of 10% were adopted for 5,745 tariff subheadings on 21 September 2018, which were set to expire by the end of that year.

While the panel did not concretely define the limits of ‘public morals’ in Article XX(a) GATT and ultimately concluded that the US measures were not ‘necessary’ to achieve the objective, its interpretation vastly expanded the meaning of the exception to cover a swathe of economic interests. These are comprised of ‘the prohibition of theft, extortion, cyber-enabled theft and cyber-hacking, economic espionage and the misappropriation of trade secrets, anti-competitive behaviour, as well as the regulation of governmental takings of property’.Footnote 8 It is contended that the panel interpretation is unsubstantiated, stretching the ‘public morals’ exception without establishing any otherwise legitimate subject-matter constraints.

This research note examines the scope of the ‘public morals’ exception and proposes an alternative framework for defining the scope of the exception ground. While focus is placed primarily on Article XX(a) GATT, the approach is equally applicable to the ‘public morals’ prong of the exception in Article XIV(a) GATS. Section 2 presents the analytical flaws underlying the panel's approach towards interpreting the Article XX(a) exception and its missed opportunity to address the issue of extraterritoriality. Alternative approaches to defining the limits of the ‘public morals’ exception are discussed, and a proposal for a multilaterally defined content restriction is offered in Section 3. The question of extraterritoriality is tackled in Section 4. Finally, the conclusions are summarized in Section 5.

2. Assessment of Article XX(a) in US–Tariff Measures Panel Report

2.1 Framing the Panel's Inquiry

After holding that the tariff measures adopted by the US amounted to violations of Articles I:1, and II:1(a) and (b) GATT, the panel was faced with determining if the measures were justified in light of the ‘public morals’ exception. In framing the inquiry, the report began by summarizing the existing approach to determining the scope of the exception. Consistent with prior Appellate Body and panel reports, the term ‘public morals’ was defined as ‘a set of habits of life relating to right and wrong conduct (i.e. societal values) that belong to, affect or concern a community or a nation’.Footnote 9 The panel thus highlighted several important features of the term's conceptual fluidity, in particular that public morals (i) vary geographically from society to society, (ii) can temporally change, and (iii) are defined by ‘a range of factors, including prevailing social, cultural, ethical and religious values’.Footnote 10

The theoretical contribution stemming from the panel's inquiry becomes more pronounced when addressing the specific international economic interests at issue. It framed its inquiry by first investigating whether Article XX exceptions ‘can pertain to economic interests and concerns’, following which it considered if this was the case specifically vis-à-vis the ‘public morals’ exception, especially in terms of ‘concerns pertaining to unfair competition’.Footnote 11 Conceptually, the framing of issues suggests that the panel drew key distinctions between both the general and specific grounds, as well as between the specific moral values at issue. However, emphasis was only placed on the general economic dimension of general exception, rather than whether they cover trade liberalization specifically, as China contested.Footnote 12 The significance of this conflation is addressed below.

2.2 Panel Interpretation of the Scope of Article XX(a)

In addressing the scope of the term ‘public morals’, the panel adopted somewhat laconic reasoning to justify why it included the contested values. Concerning the first issue, it observed the broad scope of economic justifications found within Article XX, referring specifically to the ‘economic dimension’ of the exceptions for ‘the importation or exportation of gold or silver (Article XX(c)), the protection of intellectual property rights (Article XX(d)), price stabilization efforts (Article XX(i)) and products in short supply (Article XX(j))’.Footnote 13 Even though the argument is logically correct, the panel ultimately avoided addressing the types of economic concerns embodied in the cited sub-paragraphs, which largely regard domestic fiscal and monetary policies (Article XX(c) and (i)), rightsholder protection (Article XX(d)), and meeting ‘essential’ consumer demand (Article XX(j)) respectively.Footnote 14 While the interests embodied have an impact on trade liberalization, they stem from different domestic economic interests, rather than systemic views regarding international economic relations.

In considering the second issue, the panel framed its answer by pointing out that ‘public morals objectives may frequently have inseparable economic aspects’.Footnote 15 This had been supported by references to existing jurisprudence, such as in Brazil–Taxation and US–Gambling, and the US example of how ‘stealing money from a bank’ simultaneously leads to ‘economic harm’ and ‘is contrary to standards of wrong’.Footnote 16 This was further supported by a hypothetical measure to ‘protect against … risks to health’ that also has ‘a clear economic effect and directly affects trade’.Footnote 17 This is broadly consistent with the Appellate Body's approach in EC–Seal Products, where it reviewed the measure holistically under Article XX(a) to determine that the seal products ban and its exception together protected seal welfare, even though the exception de facto served to protect Inuit Community subsistence.Footnote 18 Crucially, however, the panel's examination thus far only considered that public morals may have economic effects, but not whether they also include purely economic values.

Subsequently, the panel maintained that Members retain deference under Article XX(a) to determine the ‘various values prevailing in their societies at a given time’.Footnote 19 In arguing that the economic objectives cited by the US amounted to ‘public morals’, however, the panel was forced to address the exact scope of Article XX(a). On this point, it held that ‘a holistic approach to the various elements of Article XX(a)’ would be able to balance the interests at stake, and in the particular instance was only ‘considering the issue of the public morals objectives invoked by the United States’.Footnote 20 While not directly addressing the substantive issue of whether ‘unfair competition’ constitutes a ‘public morals’ objective, it essentially expanded the scope of Article XX(a) to include the cited values.

In adopting a broad reading of Member discretion without regard to the specific limits of ‘public morals’, the panel implied that there are no concrete legal limits to what the term means. This explanation appears problematic. First, it suggests that essentially any value type can qualify as a public moral. Hence, the panel's earlier distinction between non-economic public morals and economic consequences is rendered moot. Second, the protection of justifiable ‘public morals’ objectives can be prevented entirely under the necessity and Article XX chapeau tests, thus introducing heuristic inconsistency. If a ‘disguised restriction on international trade’ constitutes a legitimate public moral value, it is unclear why the chapeau would prevent Members from protecting it. As such, this highlights the general inconsistency of this approach.

Moreover, the panel's interpretation appears to be inconsistent with the principle of good faith by legitimizing disguised forms of protectionism and unilateralism to circumvent Members’ obligations.Footnote 21 If Article XX(a) legitimizes all values held by a Member, then the remaining requirements must be interpreted in a way that allows Members to be able to protect said values.Footnote 22 As the Russia–Traffic in Transit panel held regarding Article XXI, an exception must not be invoked ‘as a means to circumvent their obligations under the GATT 1994’.Footnote 23 By presenting no limits to what values can qualify as ‘public morals’ – which essentially permits unfettered trade unilateralism to fall under the exception – the panel reading is inconsistent with the object and purpose of the WTO Agreement as established in its preamble (‘to preserve the basic principles and to further the objectives underlying this multilateral trading system’).

Finally, the report presents a missed opportunity to address whether Article XX(a) may be invoked extraterritorially. While List 2 included products that did not directly benefit from the alleged Chinese practices, the issue had only been addressed in terms of whether the measure was ‘necessary’. The panel did not find a ‘genuine relationship of ends and means’ and noted how the ‘Procedures for exclusion for List 2 products’ ultimately ‘undermine’ the moral objective due to their ‘economic considerations’.Footnote 24 This appears to be a further conflation of the material scope of the exception and the determination of necessity.

3. Reconstructing the ‘Public Morals’ Exception

3.1 Existing Approaches

To determine what qualifies as ‘public morals’, it is necessary to first answer how its content is reviewed. Broadly, three approaches have been suggested for resolving this issue. According to the first approach, the phrase maintains a strict collective understanding.Footnote 25 Feddersen has argued for a narrow reading of possible exceptions based chiefly on the GATT travaux preparatoires.Footnote 26 Based on the distinction between ‘public morals’ and ordre public found in the negotiating history, he contends that there should be a conceptual separation between the exception ground and ‘a country's national legal order’.Footnote 27 Alternatively, Gonzalez – who adopts an ambiguous stance on the interpretation that can be derived from the travaux – has argued that such a narrow reading of the exception restricting it only to GATT contracting parties’ concerns at the time of the GATT negotiations, namely ‘sex, drugs, alcohol, gambling, slavery, and animal torture’, is consistent with the trade-facilitation purpose of the GATT.Footnote 28

There are several issues with this approach. Feddersen assumes that a textual interpretation of the treaty is ambiguous.Footnote 29 However, this is not justified given that the phrase ‘public morals’, textually understood to mean ‘standards of right and wrong conduct maintained by or on behalf of a community or nation’, is generic – thus allowing for evolution and Member's discretion – and addresses values pertaining to a range of communities or nations.Footnote 30 Moreover, the travaux themselves are largely ambiguous on this issue.Footnote 31 Likewise, the object and purpose of the GATT are inconsistent with Gonzalez's proposed interpretation of exception provisions. By calling for a narrow teleological reading, he fails to recognize that the trade emphasis in the WTO Agreement preamble also reflects Members’ ‘respective needs and concerns at different levels of economic development’, which is not restricted to trade liberalization. At the very least, there is no clear teleological indication that either a narrow or broad approach must be adopted.Footnote 32 Hence, as Article XX has been construed to reflect the right to regulate trade, such a narrow construction would be unjustifiable.Footnote 33

Alternatively, Howse and Langille have proposed a pluralist reading, according to which Members essentially retain the freedom to invoke public morals claims and panels should refrain from ‘second-guessing bona fide moral regulation’ as it is ‘not part of [the WTO] mandate’.Footnote 34 In essence, this perspective is derived from the distinction between the standard of review for ‘instrumental regulation’ and ‘noninstrumental moral concerns’, where the ‘sincerity’ of the latter is assumed and need not be proved.Footnote 35 In clarifying the legal standard of review required, Howse, Langille, and Sykes propose that this comprises a negative list.Footnote 36 At its core, this approach conflicts with the standard of review adopted in US–Tariff Measures. While the panel adopted no clear parameters delimiting the policy space, but only required an evidentiary burden of proof, a pluralist approach instead limits the set of possible values which can be invoked while providing for a lax standard of factual review.Footnote 37

There are several flaws underlying this approach. It is primarily unclear how it is justified outside of policy grounds, chiefly the ‘institutional role of the WTO’, particularly since a panel refraining from conducting a review of matters of fact conflicts with its institutional duty to make ‘an objective assessment of the facts of the case’ under Article 11 of the Dispute Settlement Understanding (DSU).Footnote 38 As such, it is difficult to reach such an interpretation except on extra-textual policy considerations.

Moreover, it is unclear whether the Appellate Body in EC–Seal Products adopted a pluralist approach when defining the standard of factual review as proponents of the approach suggest.Footnote 39 Notably, it did not accept the ‘strict consistency test’ proposed by Canada and instead recognized the panel's conclusion that ‘Members should be given some scope to define and apply for themselves’.Footnote 40 However, the Appellate Body may only review ‘issues of law covered in the panel report and legal interpretations developed by the panel’ per Article 17.6 DSU.Footnote 41 Indeed, the European Union (EU) had previously justified its claim based on survey data and EU legislation before the panel as evidence demonstrating that seal welfare is in fact a European value.Footnote 42 Similarly, this evidentiary burden of proof has been taken into account elsewhere, particularly the panel report in Brazil–Taxes. Footnote 43

Finally, other international courts that have applied pari materia exceptions have adopted evidentiary reviews. The Court of Justice of the European Union, for instance, maintained in Conegate that ‘a Member State may not rely on grounds of public morality in order to prohibit the importation of goods from other Member States when its legislation contains no prohibition on the manufacture or marketing of the same goods on its territory’, even though EU Member States maintained discretionary powers.Footnote 44

It is suggested that the appropriate standard of review by a panel entails objectively reviewing both matters of fact and law, albeit maintaining Members’ limited discretion in determining their own domestic values. Turning to the former, it should involve a review of evidence that there is both a held value and that the measure adopted is intended to protect said value. This standard reflects the distinction between different regulatory objectives, hence respecting the differences between Members’ individual value systems. As suggested, this balance could already be seen in the silence of the panel findings in EC–Seal Products. The panel recognized the moral dimension of the ban and its exception, even if this conclusion differed from the EU General Court's prior determination in Inuit Tapiriit Kanatami.Footnote 45 Some have criticized this as an expansion used to enable ‘moral imperialism’;Footnote 46 however, this reading allows for the underlying values to be objectively ascertained in good faith and protected if observed independently from the domestic legal framework.Footnote 47 Likewise, the reading amounts to a guarantee that values that are not protected by the WTO Agreement and may establish inconsistencies in the treaty's object and purpose fall under the ambit of ‘public morals’. The legal standard of review is addressed in the next section.

3.2 Defining the Outer Bounds of ‘Public Morals’

Fundamentally, there are two possible approaches to understanding which values fall outside the outer bounds of the ‘public morals’ exception. First, as suggested by Gonzalez, this would be to limit the content of the exception to a defined positive set of multilaterally agreed-upon values which can be invoked. However, as already shown, this approach is largely untenable, and inconsistent with the textual interpretation of ‘public morals’ adopted by the WTO Appellate Body and panels.

Alternatively, as this note proposes, a negative set approach could be adopted. Substantively, Members maintain the right to protect any values which do not conflict with the chapeau of Article XX, the object and purpose of the WTO Agreement, and relevant multilateral agreements and customary international law – particularly jus cogens norms and obligations erga omnes – in light of Article 31(3)(c) VCLT.Footnote 48 As such, a balance is struck between Members’ right to determine their own values and legitimate multilateral constraints.

With respect to restraints originating from the WTO Agreement, Article XX(a) GATT can be interpreted to restrict values which would conflict with the chapeau conditions, even if they are comparatively agnostic regarding the values which can be protected. While the Appellate Body has maintained that a conceptual distinction exists between the sub-paragraphs and chapeau,Footnote 49 this distinction has in practice been consistently blurred when applying the provision, particularly by addressing discriminatory effects under the sub-paragraph ‘necessity’ test without an evident justification for this.Footnote 50 Likewise, even if such a distinction exists, there is no reason why a contextual interpretation would be restricted. By treating the chapeau as ‘context’ in interpreting ‘public morals’, it is possible to restrict values which constitute ‘arbitrary or unjustifiable discrimination between countries where the same conditions prevail’, or establish a ‘disguised restriction on international trade’ from being justified.

More significantly, values which frustrate the object and purpose of the WTO Agreement fall outside the protection of Article XX(a) GATT. This is for two main reasons. First, interpreting ‘public morals’ in light of the object and purpose of the WTO Agreement, values including unqualified protectionism and the unfettered unilateral enforcement of international economic values fall outside the ‘public morals’ exception remit.Footnote 51 Second, even as exceptions under Article XX justify measures otherwise constituting breaches of the GATT 1994, and related agreements incorporating the general exception provisions,Footnote 52 they do not extend to violations of the customary obligation to maintain the object and purpose of the WTO Agreement. Framed in narrow terms in Military and Paramilitary Activities,Footnote 53 the obligation entails that ‘the conditions for the viability of the treaty once it has entered into force’ are sustained.Footnote 54 Interpreting ‘public morals’ in this light, per Article 31(3)(c) of the VCLT, affirms the restriction on protectionism or international economic unilateralism qua public morals.

Finally, resort can be made to ‘relevant rules of international law’ by relying on Article 31(3)(c) VCLT. While the Appellate Body and panels have regularly refused to apply non-WTO norms where they conflict with WTO obligations, they have been more open to consider non-WTO sources when addressing issues of interpretation.Footnote 55 To determine whether a rule is ‘relevant’ for interpreting the outer bounds of the ‘public morals’ exception, it would need to be proximate in terms of language and subject-matter.Footnote 56 While the definition of ‘public morals’ adopted by the US–Gambling panel provides a relatively wide textual scope, this is balanced out by the more restrictive subject-matter element. Since the ‘public morals’ exception manifests the right to regulate trade, then generally recognized duties which balance the rights correlating from State sovereignty have a proximate subject-matter.Footnote 57

Clearly, based on the principle of systemic integration, the outer bounds include compliance with obligations erga omnes, which largely stem from jus cogens norms, as they are non-instrumental, owed to the international community, and form part of general international law.Footnote 58 At the same time, other relevant rules include norms expressing positive duties that accompany States’ right to regulate trade for moral reasons. This could be illustrated through the examples of the duties to protect fundamental human rights and the environment.Footnote 59 In brief, fundamental human rights embody positive and negative duties with which States must comply, as a matter of both treaty and customary international law, in exercising their sovereign rights.Footnote 60 The duty to protect the environment, which emerged from the no-harm principle, similarly creates general obligations of prevention.Footnote 61 Hence, values which irresolvably conflict with the fulfilment of general sovereign duties cannot be protected under Article XX(a).

4. The Extraterritorial Scope of ‘Public Morals’

The orientation of ‘public morals’ reflects the exact range of applications of the exception. This is important, as it clarifies whether the exception may be invoked by a Member purely to protect its people from breaching their value systems, or to impose their values on other Members. While this axis is heuristically distinct from the subject-matter limits of the ‘public morals’ exception addressed in Section 3, it is nonetheless important to define the circumstances in which specific values justify the adoption of trade-restrictive measures.

Broadly, there are two categories of applications: where there is an infringement on the values of ‘persons in one's own country’ (‘inwardly-oriented’), or the trade measure is used ‘to promote values in foreign countries’ (‘outwardly-oriented’).Footnote 62 This distinction is admittedly slippery since, for instance, the protection of dolphins abroad could be reframed as domestic moral concerns over animal welfare; nonetheless, it provides a suitable heuristic to address the open-ended text of the exception.Footnote 63 In practice, since Members identify the value which they claim to be protecting when invoking Article XX(a) GATT, this would not be a difficult determination to make.

The grounds for inwardly oriented readings have been based around the Havana Charter negotiations.Footnote 64 To this extent, the exception is a reflection of the right to regulate. By contrast, the issue of whether outwardly oriented values are protected is itself less clear, particularly since the text is generally silent on this question. While Howse and Langille argue that importing a restriction on outwardly oriented values artificially limits the exception, they implicitly read extraterritoriality into the meaning of ‘public morals’, which is not itself well substantiated.Footnote 65 Resort to supplementary sources, such as the travaux of the Havana Charter, would equally be inconclusive. Since the original Contracting Parties had only addressed largely inwardly oriented issues, such as ‘the promotion of temperance’, this could be seen as a restriction on outwardly oriented values from being protected.Footnote 66 Equally, however, this silence could reflect the Contracting Parties’ common understanding that the ‘public morals’ exception had a historically well-defined meaning in the context of international trade preceding the GATT that included outwardly oriented values, such as the international prohibition on slavery.Footnote 67 Neither of these arguments is convincing, with both ultimately relying on the silence of the GATT negotiating history.Footnote 68

The question of extraterritoriality is pertinent to situations where values are used to justify restrictions on importing from, or exporting to, Members owing to their morally reprehensible actions, even though the affected products have no relation to such actions.Footnote 69 In the context of the US–Tariff Measures report, the tariff measures placed on List 2 products arguably fell under this category, although this had only been considered by the panel in the context of the ‘necessity’ test.Footnote 70

Several proposals have emerged to explain the circumstances in which the exception may be invoked extraterritorially. Wu has suggested that the issue may be avoided where the invoked value (i) has been ‘been codified by an international organization through a treaty, guideline, code, or other document that has been explicitly endorsed by a majority of WTO members’, and (ii) the aggrieved Member demonstrates that the value has been ‘embraced’ by the value-breaching Member.Footnote 71 This proposal is perhaps convincing in that it suggests a way of coherently developing the scope of application of the exception. Indeed, the fact that ‘public morals’ is a term which ‘can vary in time and space, depending upon a range of factors’, and can thus be interpreted based on the principle of systemic integration, has been a key implication of the US–Gambling panel report.Footnote 72 Nonetheless, it is unclear whether, under Article 31(3)(c) VCLT, all WTO Members are required to be parties to the treaty,Footnote 73 or only the parties to a particular dispute,Footnote 74 if the treaty obligation can instead form general customary international law,Footnote 75 or if the treaty should merely represent the ‘common intentions’ of the WTO membership.Footnote 76 This issue may limit the degree to which values found in multilateral treaties justify measures against Members that are not parties to these treaties.Footnote 77 Finally, it is unclear to what extent the requirement that the ‘relevant rule’ has to be ‘between the parties’ may be compatible with the emphasis of Article XX(a) on the protection of individual Members’ national and communal values.

Alternatively, relying on Article 31(3)(c) of the VCLT, it has been contended that legislative jurisdiction under customary international law could clarify the exception's extraterritorial scope.Footnote 78 It is well-established that different States’ jurisdictions often overlap vis-à-vis the same subject-matter.Footnote 79 Bartels argues, based on a reformulation of Mann's classic reappraisal of the customary rules on jurisdiction,Footnote 80 that Members may exercise their legislative jurisdiction where there is a ‘legitimate [S]tate interest’ under international law.Footnote 81 Accordingly, in line with customary international law, it is still possible for a Member to adopt measures ‘in itself promoting respect for’ the legal interest even where the aggrieving Member is not a party to the specific convention.Footnote 82 Of course, this would further restrict the types of values that can be enforced extraterritorially, including purely religious values, or domestic economic and political interests, such as those invoked in US–Tariff Measures.Footnote 83 In light of this, Bartels notes that there are two main restrictions which delimit the extraterritorial situations where ‘public morals’ may be enforced. First, particularly where human rights obligations are invoked, this would usually be subject to ‘balancing’ principles, such as a proportionality assessment, being applied.Footnote 84 Second, where the specific value is actually complied with, extraterritorial jurisdiction may not be invoked.Footnote 85 Accordingly, such a reading provides a more consistent explanation of the circumstances in which particular ‘public morals’ may be invoked extraterritorially, and additionally reflects Members’ discretion in determining their own values.

5. Conclusion

This note has sought to examine the limits of the ‘public morals’ exception in WTO law. It critically examines the approach adopted by the panel in US–Tariff Measures and its implicit suggestion that no concrete legal standard exists restricting certain types of values from being enforceable. Accordingly, a range of inconsistencies in this reasoning are identified, in particular using mutually contradictory arguments to justify the different types of values invoked, adopting only an evidentiary standard which establishes inconsistencies over the operation of the exception, and failing to ensure its approach conforms with the principle of good faith.

It is suggested that an alternative approach should be adopted to define the outer bounds of the ‘public morals’ exception. The proposed standard of review should involve objective review of matters of both fact and law. Given Members’ discretion in defining their own values, this is crucial as it can both ensure that the value is invoked in good faith and guarantee that this determination is made independently of domestic legal constraints.

Finally, it proposes that the outer bounds of Article XX(a) operate as a negative list. This solution protects Members’ discretion to invoke values in exercising their right to regulate trade, so long as the values do not conflict with core WTO principles of non-discrimination, the object and purpose of the WTO Agreement together with relevant rules of international law reflecting sovereign duties. In terms of the extraterritorial limits within which the ‘public morals’ exception may be invoked, a reading of the provision in line with the principle of legislative jurisdiction offers a reasonable solution to protecting Members’ values while recognizing relevant multilateral constraints.

Acknowledgements

The author is grateful to Lorand Bartels, Oliver Hailes, Maria Laura Marceddu, Akbar Rasulov, and the two anonymous reviewers for comments and discussions. All errors are his own.

References

1 For instance, Mavroidis, P.C. (2015) The Regulation of International Trade, Volume 1: GATT. MIT Press, 428; Charnovitz, S. (1998) ‘The Moral Exception in Trade Policy’, Virginia Journal of International Law 28(4), 689.

2 Appellate Body Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April 2005, paras. 296–299 (hereinafter Appellate Body Report, US–Gambling (2005)).

3 Appellate Body Report, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/AB/R; WT/DS401/AB/R, adopted 16 June 2014, para. 5.167 (hereinafter Appellate Body Report, EC–Seal Products (2014)).

4 Panel Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/R, adopted 19 January 2010, paras. 7.751–7.766 (hereinafter, Panel Report, China–Audiovisual Products (2010)).

5 Panel Report, Brazil – Certain Measures Concerning Taxation and Charges, WT/DS472/R; WT/DS497/R, adopted 11 January 2019, para. 7.568 (hereinafter Panel Report, Brazil–Taxation (2019)).

6 United States Trade Representative, ‘Findings of the Investigation into China's Acts, Policies, and Practices related to Technology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade Act of 1974’ (2018), 4, ustr.gov/sites/default/files/Section%20301%20FINAL.PDF (accessed 7 October 2021).

7 Panel Report, United States – Tariff Measures on Certain Goods from China, WT/DS543/R, not yet adopted, para. 7.113 (hereinafter Panel Report, US–Tariff Measures (not yet adopted)).

8 Ibid., ibid.

9 Ibid., para. 7.115.

10 Ibid., para. 7.116.

11 Ibid., para. 7.135.

12 Ibid., para. 7.133.

13 Ibid., para. 7.136.

14 For Article XX(j) GATT, Appellate Body Report, India – Certain Measures Relating to Solar Cells and Solar Modules, WT/DS456/AB/R, adopted 14 October 2016, paras. 5.62–5.63.

15 Panel Report, US–Tariff Measures (not yet adopted), para. 7.137.

16 Ibid., para. 7.137 and fn 268.

17 Ibid., para. 7.137.

18 Appellate Body Report, EC–Seal Products (2014), paras. 5.191–5.193.

19 Ibid., para. 7.138.

20 Ibid., paras. 7.139–7.140.

21 Gardiner, R. (2015) Treaty Interpretation. Oxford University Press, 168, 179–181. Notably, Panel Report, US–Tariff Measures (not yet adopted), para. 7.156 makes recourse to effective interpretation, a corollary of the principle of good faith.

22 For effet utile as part of good faith interpretation, Territorial Dispute (Libyan Arab Jamahiriya v Chad) (Merits) (1994) ICJ Rep 6, para. 47; Application of the Interim Accord of 13 September 1995 (The Former Yugoslav Republic of Macedonia v Greece) (2011) ICJ Rep 644, para. 92. For harmonious interpretation, Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, paras. 80–81.

23 Panel Report, Russia – Measures Concerning Traffic in Transit, WT/DS512/R, adopted 26 April 2019, para. 7.128 (hereinafter Panel Report, Russia–Traffic in Transit (2019)).

24 Panel Report, US–Tariff Measures (not yet adopted), paras. 7.222–7.227.

25 Feddersen, C.T. (1998) ‘Focusing on Substantive Law in International Economic Relations: The Public Morals of GATT's Article XX(a) and Conventional Rules of Interpretation’, Minnesota Journal of International Law 7, 75, 115. Howse, R. (1999) ‘The World Trade Organization and the Protection of Workers’ Rights’, Journal of Small & Emerging Business Law 3(1), 131, 142 argues for this based on Article 31(3) Vienna Convention on the Law of Treaties (adopted 23 May 1969, entered into force 27 January 1980) 1155 UNTS 331 (VCLT).

26 Feddersen (n 25) 117–121.

27 Ibid,, 119.

28 Gonzalez, M.A. (2006) ‘Trade and Morality: Preserving Public Morals without Sacrificing the Global Economy’, Vanderbilt Journal of Transnational Law 39(3), 939, 945, 971.

29 Feddersen (n 25) 106 stating ‘While all contracting parties would agree on the same formal definition of ‘public morals,’ nothing has been said about the material content of public morals.’

30 Panel Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/R, adopted 20 April 2005, para. 6.465 for Article XIV(a) GATS; Panel Report, China–Audiovisual Products (2010), para. 7.763 for Article XX(a) GATT.

31 Compare Feddersen (n 25) 106, Gonzalez (n 28) 945, and Charnovitz (n 1) 703–705.

32 Appellate Body Report, European Communities – Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R; WT/DS48/AB/R, adopted 13 February 1998, para. 104 (hereinafter Appellate Body Report, EC–Hormones (1998)); Whaling in the Antarctic (Australia v Japan: New Zealand Intervening) (Judgment) (2014) ICJ Rep 226, para. 58.

33 Appellate Body Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R, adopted 19 January 2010, paras. 223–229 (hereinafter, Appellate Body Report, China–Audiovisual Products (2010)).

34 Howse, R. and J. Langille, (2012) ‘Permitting Pluralism: The Seal Products Dispute and Why the WTO Should Accept Trade Restrictions Justified by Noninstrumental Moral Values’, Yale Journal of International Law 37, 368, 427.

35 Ibid, 429–430, challenging whether ‘public morals’ have to be proven in front of panels, and arguing that ‘such decisionmaking would be inherently at odds with one of the major purposes of allowing moral regulation under the WTO in the first place: preserving the pluralism of the members of the international community that constitute the WTO’. (417)

36 Howse, R., J. Langille, and K. Sykes (2015) ‘Pluralism in Practice: Moral Legislation and the Law of the WTO After Seal Products’, The George Washington International Law Review 48(1), 81, 105.

37 Panel Report, US–Tariff Measures (not yet adopted), paras. 7.139–7.140.

38 Howse, Langille, and Sykes (n 36) 95.

39 Ibid, 144–145. At 105, Howse, Langille, and Sykes acknowledge that a level of factual review may exist but limit it to the ‘moral nature’ of the claim.

40 Appellate Body Report, EC–Seal Products (2014), paras. 5.195–5.201 affirming Panel Report, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/R; WT/DS401/R, adopted 16 June 2014, para. 7.380 (hereinafter, Panel Report, EC–Seal Products (2014)).

41 Article 17.6 of the DSU.

42 Panel Report, EC–Seal Products (2014), para. 7.370 in fn 623.

43 Panel Report, Brazil–Taxation (2019), para. 7.558 ('this latitude does not excuse a responding party in dispute settlement from its burden of establishing that the alleged public policy objective at issue is indeed a public moral objective according to its value system’); Panel Report, Indonesia – Importation of Horticultural Products, Animals and Animal Products, WT/DS477/R; WT/DS478/R, adopted 22 November 2017, para. 7.648.

44 Case 121/85 Conegate v HM Customs and Excise [1986] ECR 1007, para. 16. For deferential standard, Case 34/79 Regina v Maurice Donald Henn and John Frederick Ernest Darby [1979] ECR 3795, paras. 15–16.

45 Case T-526/10 Inuit Tapiriit Kanatami and Others v European Commission [2013] EU:T:2013:215, paras. 71–72.

46 Whitsitt, E. (2014) ‘A Comment on the Public Morals Exception in International Trade and the EC–Seal Products Case: Moral Imperialism and Other Concerns’, Cambridge International Law Journal 3(4), 1376, 1381–1384.

47 An ‘objective’ standard has been applied even to security exceptions. Consider Panel Report, Russia–Traffic in Transit (2019), para. 7.101 and Panel Report, Saudi Arabia – Measures Concerning the Protection of Intellectual Property Rights, WT/DS567/R, not yet adopted, paras. 7.244–7.246. If, as Howse, Langille, and Sykes (n 36) 103 contend, public morals ‘legislation does not conform, at least as strongly, with these (sic) features’ of national security measures, then a contrario an objective standard of review is justified.

48 Howse, Langille, and Sykes (n 36) 105 make a similar proposal, although limiting legal review to ‘jus cogens, international human rights law, and basic compatibility with core WTO norms’.

49 Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, para. 119 (hereinafter Appellate Body Report, US–Shrimp (1998)).

50 Consider Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/AB/R; WT/DS169/AB/R, adopted 10 January 2001, paras. 163–166; Appellate Body Report, Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines, WT/DS371/AB/R, adopted 15 July 2011, para. 179. For challenges to how the Appellate Body has reasoned based solely on the subparagraphs, Bartels, L. (2015) ‘The Chapeau of the General Exceptions in the WTO GATT and GATS Agreements: A Reconstruction’, American Journal of International Law 109(1), 95, 108.

51 Consider WTO Agreement, preamble, referring to ‘the basic principles’ and ‘the objectives underlying this multilateral trading system’.

52 Appellate Body Report, China–Audiovisual Products (2010), para. 229.

53 Military and Paramilitary Activities in and against Nicaragua (Nicaragua v United States of America) (Merits) (1986) ICJ Rep 14, paras. 272–276.

54 Kritsiotis, D. (2018) ‘The Object and Purpose of a Treaty's Object and Purpose’, in M.J. Bowman and D. Kritsiotis (eds.), Conceptual and Contextual Perspectives on the Modern Law of Treaties. Cambridge University Press, 273 (emphasis removed).

55 For normative conflict, consider Appellate Body Report, Peru – Additional Duty on Imports of Certain Agricultural Products, WT/DS457/AB/R, adopted 31 July 2015, paras. 5.110–5.117; Appellate Body Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, WT/DS56/AB/R, adopted 22 April 1998, para. 74. Appellate Body Report, EC–Hormones (1998), paras. 120–125 refused to recognise the precautionary principle as a norm overriding WTO obligations, and yet highlighted the role of precaution for treaty interpretation. For interpretation based on non-WTO legal sources more broadly, consider Appellate Body Report, US–Shrimp (1998), paras. 130–134, 158; Panel Report, European Communities – Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R; WT/DS291/R; WT/DS293/R, adopted 21 November 2006, paras. 7.65–7.72, 7.90–7.96.

56 Panos Merkouris, Article 31(3)(c) VCLT and the Principle of Systemic Integration (Brill/Nijhoff 2015) ch 1 equates the conditions of Article 31(3)(c) VCLT to elements underpinning a single ‘proximity’ criterion which are weighed by international courts and tribunals. For ‘between the parties’, see discussion in Section 4 below.

57 See generally Schrijver, N. (2009) Sovereignty over Natural Resources: Balancing Rights and Obligations, Cambridge University Press, ch 10; Nolte, G. (2005) ‘Sovereignty as Responsibility?’, Proceedings of the ASIL Annual Meeting 99, 389, 390–392.

58 Consider Barcelona Traction, Light and Power Company, Limited (Belgium v Spain) (1970) ICJ Rep 3, para. 33; Legality of the Threat or Use of Nuclear Weapons (Advisory Opinion) ICJ Rep 226, paras. 83–84.

59 UNGA Res 2625 (XXV) (24 October 1970) further notes the duties ‘to respect the personality of other States’, ‘co-operate’, settle disputes peacefully, and the prohibition on intervention in other States’ ‘territorial integrity and political independence’.

60 Benvenisti, E. and A. Harel, (2017) ‘Embracing the Tension between National and International Human Rights Law: The Case for Discordant Parity’, International Journal of Constitutional Law 15(1), 36, 40 ('The protection of rights is a duty of the state—including its pouvoir constituant—rather than contingent on its good will or discretion.’). For human rights protection as a ‘principle’ and its role within UNGA Res 2625, see Riedel, E. (2020) ‘Human Rights Protection as a Principle’ in J.E. Viñuales (ed.), The UN Friendly Relations Declaration at 50: An Assessment of the Fundamental Principles of International Law. Cambridge University Press.

61 Pulp Mills on the River Uruguay (Argentina v Uruguay) (Judgment) [2010] ICJ Rep 14, para. 101; Legality of the Threat or Use of Nuclear Weapons (Advisory Opinion) [1996] ICJ Rep 226, para. 29; Trail Smelter case (USA/ Canada) [1941] 3 RIAA 1907, 1965. For a systemic account of the norms embodying prevention broadly understood, see Dupuy, P.-M. and J.E. Viñuales (2018) International Environmental Law, 2nd edn. Cambridge University Press, 61–80.

62 Charnovitz (n 1) 695.

63 Ibid, 703–705; Feddersen (n 25) 84–86; Wu, M. (2008) ‘Free Trade and the Protection of Public Morals: An Analysis of the Newly Emerging Public Morals Clause Doctrine’, Yale Journal of International Law 33(1), 215, 217–219.

64 Feddersen (n 25) 117–121. A broad approach should be taken here, including where the ‘public morals’ of Members’ nationals are affected indirectly by imported goods, such as by benefitting from child labour. See, e.g., Charnovitz (n 1) 695; Diebold, N.F. (2007) ‘The Morals and Order Exceptions in WTO Law: Balancing the Toothless Tiger and the Undermining Mole’, Journal of International Economic Law 11(1), 43, 70–71.

65 Howse and Langille (n 34) 414.

66 UN Economic and Social Council, ‘Report of the Drafting Committee of the Preparatory Committee of the United Nations Conference on Trade and Employment’ (29 May 1947) UN Doc E/PC/T/34/Rev.1, 31.

67 Charnovitz (n 1) 705–715.

68 Bartels, L. (2002) ‘Article XX of GATT and the Problem of Extraterritorial Jurisdiction: The Case of Trade Measures for the Protection of Human Rights’, Journal of World Trade 36(2), 353, 359. For silence in WTO treaty interpretation practice generally, Van Damme, I. (2008) ‘The Non-Politics of Interpreting Silences in the WTO Covered Agreements’, Proceedings of the American Society of International Law 102, 420.

69 Bartels (n 68) 357; Wu (n 63) 235 addressing what he describes as ‘Type III restrictions’.

70 Panel Report, US–Tariff Measures (not yet adopted), paras. 7.220–7.222.

71 Wu (n 63) 245–246. Concerning the second category, this is a development from the suggestion in Cleveland, S.H. (2001) ‘Human Rights Sanctions and the World Trade Organization’, in F. Francioni (ed.), Environment, Human Rights, and International Trade, Hart Publishing, 239 that this will be met where the value has been adopted by both Members, constitutes a jus cogens norm, or is an erga omnes obligation. Howse (n 25) 142–143 and Marceau, G. (1999) ‘A Call for Coherence in International Law: Praises for the Prohibition Against ‘Clinical Isolation’ in WTO Dispute Settlement’, Journal of World Trade 33(5), 87, 123–128 have argued for a definition based on Article 31(3) VCLT.

72 Panel Report, US–Gambling (2005), para. 6.461. Compare with similar phrasing in Legal Consequences for States of the Continued Presence of South Africa in Namibia (South West Africa) Notwithstanding Security Council Resolution 276 (1970) (Advisory Opinion) (1971) ICJ Rep 16, para. 53.

73 Linderfalk, U. (2007) On the Interpretation of Treaties. Springer, 178; Jennings, R. and A. Watts (2008) Oppenheim's International Law. Longmans, 1274. This position is perhaps most compatible with the WTO dispute settlement system obligation to ensure ‘security and predictability’, per Article 3.2 of the DSU.

74 Palmeter, D. and P.C. Mavroidis (1998) ‘The WTO Legal System: Sources of Law’, American Journal of International Law 92(3), 398, 411.

75 McLachlan, C. (2005) ‘The Principle of Systemic Integration and Article 31(3)(c) of the Vienna Convention’, International & Comparative Law Quarterly 54(2), 279, 314 citing the argument that United Nations Convention on the Law of the Sea (adopted 10 December 1982, entered into force 16 November 1994) 1833 UNTS 3 reflects customary international law in Appellate Body Report, US–Shrimp (1998), para. 130 at fn 110.

76 Pauwelyn, J. (2003) Conflict of Norms in Public International Law. Cambridge University Press, 258. This approach seems to have been adopted given that multilateral treaties to which most (but not all) Members are parties were cited in Appellate Body Report, US–Shrimp (1998), para. 130. See also Panel Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia (US–Shrimp (21.5 – Malaysia)), WT/DS58/AB/RW, adopted 21 November 2001, para. 5.57 reaffirming this position.

77 Bartels (n 68) 364–365.

78 ‘Jurisdiction’ is here understood to mean the State's ability to act in a manner in accordance with international law. Consider Bucher, A. (2005) ‘La compétence universelle civile en matière de réparation pour crimes internationaux’,Insititut de droit international, Séssion de Tallinn 76, 1, 89–90. The legislative jurisdiction argument has been developed in Bartels (n 67) 365–402 and Manzini, P. (1999) ‘Environmental Exceptions of Art XX GATT 1994 Revisited in the Light of the Rules of Interpretation of General International Law’, in P. Mengozzi (ed.), International Trade Law on the 50th Anniversary of the Multilateral Trade System, Giuffrè, 839–840.

79 For instance, The Case of the S.S. ‘Lotus’ (France v Turkey) PCIJ Rep Series A No 10, 19, 30–31; Hertogen, A. (2006) ‘Letting Lotus Bloom’, European Journal of International Law 26(4), 901, 906–913 for analysis. Overlapping jurisdiction is also implied in multilateral treaties, consider Article VI, Convention on the Prevention and Punishment of the Crime of Genocide (adopted 9 December 1948, entered into force 12 January 1951) 78 UNTS 277.

80 Mann, F.A. (1964) ‘The Doctrine of Jurisdiction in International Law’, Recueil des Cours 111, 1, 36–37, 46 concerning a ‘genuine connection’; Mann, F.A. (1984) ‘The Doctrine of International Jurisdiction Revisited after Twenty Years’, Recueil des Cours 186, 15, 28–30 concerning legal ‘closeness of connection’.

81 Bartels (n 67) 374–375.

82 Ibid, 376, concerning human rights protection. Regarding the pacta tertiis principle, Bartels argues that this would not be affected given that States do not have exclusive jurisdiction over their own nationals (367).

83 This rests upon the distinction between the legal obligations and political disputes. Lauterpacht, H. (2011) The Function of Law in the International Community. Oxford University Press, 197 describes political disputes as follows: ‘an obligation whose scope is left to the free appreciation of the obligee … does not constitute a legal bond’.

84 Bartels (n 67) 375.

85 Ibid.