ECJ v GATT/WTO: Comparison of approaches towards non-tariff barriers

This is my response to J. H. H. Weiler’s Towards a Common Law of International Trade.

In the EU, Art. 34 TFEU prohibits quantitative restrictions and measures with equivalent effect on intra trade. The ECJ played a crucial role in defining the scope and meaning of non-tariff barriers through landmark cases such as the Dassonville case (defining MEQR as any measure that obstructs the free movement of goods within the EU), the Cassis case (emphasising the need for mutual recognition as a means to eliminate indirect discrimination) and the Keck case (permitting each member state to apply its own sales modalities as long as they do not directly or indirectly discriminate between domestic and foreign goods).

In the WTO, the GATT regime consists of the three main features: (1) an obstacle-oriented prohibition on the point of entry and/or market access denial (Most Favoured Nation; Article XI); (2) a discrimination-oriented prohibition on internal market regulation (National Treatment; Article III:4); and (3) an overarching Derogation Clause (the General Exceptions of Article XX GATT) which applies equally to the provisions on market access and market regulation. As Luis correctly stated, the principle of MFN concerns discrimination (which is still subject to exceptions, including regional trade agreements) while the principle of NT applies once the imported goods enter the country’s territory.

It could be said that the EU and the WTO fundamentally share the same goal, to promote trade liberalisation and to encourage trade cooperation among its states. However, this goal is pursued quite differently in practice. The EU is a customs union without internal frontiers, complete with a complex institutional architecture of multi-level governance, where free movement of goods is only a subset of its functions. The WTO, on the other hand, is limited to its function of trade liberalisation, and its decision-making process is based on the consensus of 164 autonomous states. In J. H. H. Weiler’s words: The EU aims to be a single market with a uniform regulatory regime irrespective of national boundaries. The WTO envisages multiple markets, each following its own regulatory regime determined by national socio-economic choices, but allowing imported goods to compete without discrimination within those markets. This structural difference explains why the WTO distinguishes at-the-border and behind-the-border non-tariff measures while the EU prohibits all discriminatory trading rules and customs duties.

What intrigues me is the interaction between the WTO and the EU. The TFEU clauses on the internal market were mostly taken after the GATT articles, albeit with considerable nuance changes. The ECJ’s landmark rulings, in turn, influenced how the WTO’s AB views trade obstacles. According to Weiler, the Keck case represents the EU’s ‘bending’ towards the GATT’s National Treatment rationale, while the Hormones (US Beef) case represents the GATT’s bending towards the Obstacles rationale of the EU. The reasons behind the ECJ’s Keck ruling (while not all clearly made known), such as that two decades had passed since the Dassonville ruling, and Europe has become quite a different place with the adoption of the Single Market, further illustrate that rulings of the ECJ or the WTO AB are never set in stone, and they tend to influence one another.