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«Russia and the World Community’s Respond to a Challenge of Instability of Economic and Legal Systems Materials of the International Scientific-practical Conference ...»

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Article 2.2 has several implications. First, it requires a Member to justify its technical regulations under the heading of ‘legitimate objectives’, even though these are broadly defined. Second, Members must comply with the least traderestrictive principle (proportionality principle). Third, Article 2.3 establishes the principle that technical regulations should only be maintained as long as there is a policy reason for them, and they should be changed if a less restrictive alternative arises which is capable of meeting the objective. The Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) covers all sanitary and phytosanitary measures that may affect international trade. Members may only adopt measures to the extent necessary to protect human, animal or plant life or health, and measures should be based on scientific evidence. Apart from the principle of proportionality, Members must also observe the principle of non-discrimination. Furthermore, Article 4.1 reE.g. a border adjustment tax can be levied if the product contains a specific ingredient which is also taxed domestically, but not if the tax is levied because the ingredient was used in the production but is not traceable in the product; see also the report United States – Taxes on Petroleum and Certain Imported Substances, adopted 17 June 1987, L/6175 – 34S/136.

See also Chapter 8 below and S. E. Gaines, ‘Processes and Production Methods: How to Produce Sound Policy for Environmental PPM-Based Trade Measures?’, Columbia Journal of Environmental Law, 27, no. (2002), 383-432.

For an account of the TBT Agreement and the SPS Agreement see R. Wolfrum, P.-T. Stoll and A. SeibertFohr (eds.), WTO-Technical Barriers and SPS Measures (Martinus Nijhoff Publishers, 2007).

quires Members to accept SPS measures of other Members as equivalent, if it is demonstrated that they achieve the importing Member’s appropriate level of protection. Finally, there is an obligation to base such measures on international standards, guidelines or recommendation where they exist. 116 Even though SPS measures will often be discriminatory in nature, it is clear that the SPS Agreement goes beyond the non-discrimination principle.

2.2.3. Services and establishment covered by GATS The General Agreement on Trade in Services (GATS) covers services, but also covers some activities that would be covered by freedom of establishment and the free movement of workers in the EU.

Some obligations under GATS apply as general obligations, as is the case with the most-favoured-nation principle in GATS Article II, for example. Other obligations will be subject to a commitment from Members. When Members undertake commitments for specific forms of services, the principle of national treatment applies according to Article XVII, and certain forms of nondiscriminatory restrictions should also be removed. With respect to market access, Members may not maintain or adopt the kinds of measures defined in GATS Article XVI:2. These include limitations on the number of service suppliers or on the total value of service transactions, limitations on the total number of natural persons that may be employed or measures requiring specific types of legal entities or joint ventures to be used by the service supplier. These requirements not need be discriminatory. On the other hand, the list is exhaustive and cannot be broadened through interpretation. 117 However, in US-Gambling the Appellate Body decided that a US ban on online gambling amounted to a zero quota and was therefore a quantitative limitation that fell within the scope of Article XVI:2(a). 118 In doing so the Appellate Body showed at least some creativity in its interpretation, and several commentators see this decision as pointing to a broader application of Article XVI:2, where the effect of a national law has to be considered. GATS Article VI:1-3 and 6 establishes some procedural requirements which national laws regulating trade in services must observe. 120 Furthermore Article VI:4-5 provides that certain non-discriminatory restrictions should be removed. First, Article VI:4 provides that the Council for Trade in Services should develop disciplines ensuring that ‘measures relating to qualification reSee Articles 2 and 3 of the SPS Agreement.

This was established by the Panel in WT/DS285/R, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, para. 6.298.

See Appellate Body Report, 7 April 2005, WT/DS285/AB/R, United States – Measures Affecting the CrossBorder Supply of Gambling and Betting Services, para. 238.

For a very critical assessment of this development see Pauwelyn, ‘Rien ne Va Plus?’, 131-170. A more moderate assessment of the implication of the report is given by Snell, ‘The Notion of Market Access’, 442; and M.

Krayewski, ‘Playing by the Rules of the Game?’, Legal Issues of Economic Integration, 32 (2005), 417-447.

Article VI is analysed in detail by J. Wouters and D. Coppens, ‘GATS and domestic Regulation: Balancing the Right to regulate and Trade Liberalization’, in K. Alexander and M. Andenas (eds.), The World Trade Organization and Trade in Services (Martinus Nijhoff Publishers, 2008), pp. 207-263.

quirements and procedures, technical standards and licensing requirement do not constitute unnecessary barrier to trade in services’. These disciplines must ensure that such requirements inter alia are based on objective and transparent criteria, are not more burdensome than necessary and, in the case of licensing procedures, are not in themselves a restriction on the supply of the service. Until such disciplines enter into force, Article VI:5 requires Members which have undertaken specific commitments not to apply licensing and qualification requirements that do not comply with Article VI:4(a)-(c) and which could not reasonably have been expected of that Member at the time the specific commitment was made.



Article VI:4-5 is reminiscent of a broader necessity test which was in the first draft of GATS. 121 What is left is the intention of adopting further rules to ensure the removal of non-discriminatory restrictions. As in the TBT and SPS agreements, the guiding principle should be whether they are based on objective criteria and are necessary. So far, however, only one set of disciplines has been adopted, that applying to the accountancy sector. 122 Pending further progress the rules in Article VI:5 apply. It appears that the impact of the provision may be limited, as it is only when national rules ‘nullify and impair a benefit resulting from a commitment’ that they should be subject to review, and furthermore the provision does not apply to any regulation in existence when the commitments were made. 3. Which non-discriminatory restrictions should be subject to review?

In the following there is an analysis of the different criteria used for determining which non-discriminatory restrictions should be subject to review. In both the EU system and the WTO system judicial bodies have played a role in determining which non-discriminatory restrictions should be reviewed. The Court has played a much more important role in the EU than the Dispute Settlement Body has so far played in the WTO. But deciding which restrictions to review is also determined by the legislators in the two organisations. There are many examples where the EU legislator has taken positive steps to ensure the review of non-discriminatory restrictions, and in the WTO such a step was also taken by the Members when they agreed the GATS, TBT and SPS agreements.

GATS Article VI:4 provides for further progress by the WTO Members in this direction, by encouraging the development of disciplines. Finally it should be noted that in the WTO Members are often involved in the process of eliminating trade barriers on a more individual basis. This may take the form of granting concessions under GATS, or it may be on a bilateral basis as in the case of mutual recognition of conformity testing. 124 This model is not normally used in the See Wouters and Coppens, ‘GATS and domestic Regulation’, 247-248.

See S/L/64, 17 December 1998, Disciplines on domestic regulation in the accountancy sector.

See also M. Krajewski, National Regulation and Trade Liberalization in Services (Kluwer Law International, 2003), pp. 151-153; and Wouters and Coppens, ‘GATS and domestic Regulation’, 257-259.

See TBT Article 6.3. Article XXVI GATT and Articles V-V bis GATS allow for regional trade agreements, but do not explicitly encourage them.

EU, which does not in a similar way encourage bilateral agreements or regional trade agreements.

3.1. Impact on trade In the EU the Court has used a very broad concept of an effect on trade to determine which restrictions should be subject to review. This was first developed in the context of Article 34 TFEU, which prohibits restrictions having equivalent effects to quantitative restrictions. Over the years the Court has developed this concept to cover a range of different rules. For example, these can be rules requiring a product to be changed because it does not fulfil the technical standards in the country of importation, 125 or it could be a national measure which requires the importer to change advertising or sales promotion schemes. 126 Ultimately the Court has been satisfied that there is an impact on trade if the sales of imported products would be diminished due to the national measures. For this reason the restriction on Sunday trading in the UK was a measure having an equivalent effect to a quantitative restriction because less is sold when Sunday opening is restricted, and if there are imported goods on the shelves then these will also be affected. The Court has developed equally broad concepts of ‘restriction’ or ‘obstacles’ to the freedom to provide services and the freedom of establishment. The Court has focused on whether a national measure is likely to impede or render free movement less attractive. A range of different rules on marketing and employment regulations have been held to be restrictions, even though they are not discriminatory. 128 The Court has even held that the payment of a nondiscriminatory tax is a restriction, since it is likely to impede the provision of services or render it less attractive. This very broad criterion for subjecting non-discriminatory rules to review can encourage traders to challenge all kinds of rules restricting their commercial freedoms, as noted by the Court in its Keck judgment. Therefore it is reasonable to consider qualifying the concept so that not all effects on trade trigger a review. If has often been suggested to the Court that it should apply some sort of de minimis test, requiring a qualified effect on trade, but so far the Court has dismissed such a suggestion. 130 In legal theory it has been suggested that the Court should adopt an approach similar to that used in competition law, and make a more thorough examination of the effect of national measures on the market, to make sure that only measures which change the relative competitive This was the situation in the Cassis de Dijon Case mentioned above note 12.

See e.g. Case 286/81, Oostboek [1982] ECR 4575, para. 15.

See e.g. Case 145/88, Torfaen [1989] ECR 3851.

See e.g. C-442/02, Caixabank France [2004] ECR I-8961; Joined Cases C-94/04 & C-202/04, Cipolla [2006] ECR I-11421; Case C-140/03, Commission v Greece [2005] ECR I-3177; Case C-500/06, To Me Group [2008] ECR I-5785; C-190/98, Graf [2000] ECR I-493; and Case C-438/0,5 International Transport Workers’ Federation [2007] ECR I-10779.

See Joined Cases C-430/99 & C-431/99, Sea-Land Services [2002] ECR I-5235, para. 38.



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