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WTO Appellate Body Finds “Public Morals” Exception for Trade Restrictions Includes Animal Welfare




by:
Duane W. Layton
Mayer Brown LLP - Washington Office

Kelsey M. Rule
Paulette Vander Schueren
Mayer Brown LLP - Brussels Office

 
June 11, 2014

Previously published on June 4, 2014

The Appellate Body of the World Trade Organization (WTO) has issued its ruling in the dispute over the European Union’s restrictions on the importation and marketing of seals and seal products. In its May 22, 2014 “mixed ruling,” the Appellate Body struck down the EU’s regulatory scheme for seal products as arbitrary and unjustifiably discriminatory, while upholding the principle that the prevention of animal cruelty falls under the General Agreement on Tariff and Trade (GATT) exception for protecting “public morals.”

The original complaint filed by Canada and Norway challenged the EU’s ban of certain seal products from the EU market. Under the EU’s regulatory scheme, seals and seal products cannot enter the EU market unless they are (i) made with seals obtained through the traditional hunting practices of Inuit or other indigenous communities, (ii) made with seals hunted as part of an official marine resource management program and sold on a non-profit basis or (iii) brought into the EU by travelers under certain limited circumstances. The complaint alleged that this system unfairly disadvantaged imports of seal products from countries that allow commercial seal hunts.

The Appellate Body reversed the original panel’s decision that the seal ban violated the WTO Agreement on Technical Barriers to Trade (TBT Agreement). The Appellate Body held that the EU seal ban is not a technical measure within the scope of that agreement, reasoning that the seal ban described the hunters rather than the characteristics of the seal products at issue. It then addressed the EU seal ban under the requirements of the GATT.

The Appellate Body determined that the carve-outs included in the EU seal ban primarily benefited indigenous seal hunters from Greenland, creating an arbitrary and unjustifiable barrier to trade in violation of the preamble (“chapeau”) of Article XX. Specifically, the Appellate Body noted that in creating its regulatory distinction, the EU failed to properly compare the risk to seals that are subject to indigenous hunts with the risk to seals in commercial hunts. It also noted that the EU provided more guidance to indigenous populations in Greenland about qualifying for the exception than it did to indigenous populations in other countries.

However, in reaching its conclusion, the Appellate Body found that the seal ban could be exempted under GATT Article XX(a), which provides that WTO Members may take measures that restrict trade if they are necessary to protect public morals. This conclusion was a departure from previous WTO cases in which animal welfare was analyzed under Article XX(b) (protection of animal life or health) or Article XX(g) (conservation of exhaustible natural resources). By affirming that measures seeking to limit cruelty to animals fall within the purview of protecting public morals, the Appellate Body has expanded the scope of that exception. The practical effect will be more frequent use of the Article XX(a) exception, which (unlike Articles XX(b) and (g)) does not require a particular showing of risk to public morals.

To come into compliance with the Appellate Body’s ruling, the EU will need to alter its seal ban to remedy the discriminatory carve-outs. While one such solution would be to lift the seal ban entirely, it is highly unlikely that the EU will do so.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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