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The Legality of PPMs under the GATT: Challenges and Opportunities for Sustainable Trade Policy

» Jason Potts, IISD, 2008. Book, 42 pages, copyright: IISD, ISBN 978-1-895536-93-5

Since the Tuna-Dolphin cases in the mid-’90s, the treatment of process and production methods (PPMs) under the General Agreement on Tariffs and Trade (GATT), and subsequently the World Trade Organization (WTO), has been a pivotal point of debate and controversy for environmentalists, policy-makers and industry alike. And while governments and other stakeholders have since openly recognized the importance of policy which takes into account the nature of the processing and production methods, a general myth on the illegality of PPM-based policies within the WTO has persisted. Following an examination of the alleged grounds for this conclusion, as well as recent decisions by the WTO Appellate Body, the paper concludes not only that there is no basis for the assumption that PPM-based policy is a priori illegal under the WTO, but also that the legality of any given measure is favoured by taking guidance from basic principles of sustainable development such as economic efficiency, science-based decision-making and international cooperation. Building from this observation, the paper concludes by outlining a series of targeted strategies for the design of WTO-compliant PPM policy.


The Legality of PPMs under the GATT: Challenges and Opportunities for Sustainable Trade PolicyIISD Publication

Notes

Table of Contents

1. Introduction

2. The Case for PPM-based Trade Measures
Box 1: Social vs. Environmental PPMs in the Trade Context
Table 1: A Taxonomy of PPM-based Measures

3. The State of GATT Law
The Principle of Non-discrimination: Art. I, III and XI
The Threshold Rule
Like-product Analysis
Case-by-case Approach
Meaning of Likeness Criteria
Determining Discrimination among Like Products
Art. III: Effective Equality of Competitive Opportunities
Art. I: Conditionality Analysis
Box 2: The Enabling Clause
Art. XX: Beyond Extra-territoriality
Art. XX: Headings
Art. XX: Chapeau
Box 3: The Potential of Product- and Firm-oriented Market-based Measures under the GATT

4. Designing GATT-compatible PPM Measures
Designing Non-discriminatory PPM Policy: Art. I, III and XI
Designing PPM Policy Eligible for Exception under Art. XX
Designing PPM Policy through the Enabling Clause
Table 2: Strategies for Designing GATT-compliant PPM Policy

5. Conclusion