4.17. In its November 1996 Report, the CTE recalled Principle 12 of the Rio Declaration that "[u]nilateral actions to deal with environmental challenges outside the jurisdiction of the importing country should be avoided. Environmental measures addressing transboundary or global problems should, as far as possible, be based on an international consensus," and noted "there is a clear complementary between this approach and the work of the WTO in seeking cooperative multilateral solutions to trade concerns".³⁸³

4.18. Australia added that both the CTE's Report and the Singapore Ministerial Declaration had underlined the importance of policy coordination at the national level in the area of trade and environment, and the Declaration had welcomed the participation of environmental as well as trade experts in the CTE's work. These provided appropriate avenues for Members to seek to ensure that trade and environment policies were mutually supportive in promoting the objective of sustainable development.

2. Ecuador

4.19. Ecuador submitted that the international marketing of shrimp and shrimp products was extremely important for its economy, which was one of the world's foremost exporters of farmed shrimp. In 1996, Ecuador exported a total of 85,649 metric tonnes, for an amount of US$ 624,330,000. Shrimps accounted for 20 per cent of Ecuador's total exports and their share of Ecuador's GDP was currently 4 per cent.

4.20. For a number of years, countries on the Atlantic coast and in the Caribbean Basin had had to adapt their fishing practices to meet the requirements of Section 609 in order to be able to export shrimp to the United States. Countries that did not use TEDs were put on an embargo list and could not export to the United States. Ecuador was not included in the first list of countries that violated US standards because it submitted sufficient proof that its fishing practices protected sea turtles on the basis of legislation enacted in April 1996, which made it mandatory to use TEDs when taking shrimp in Ecuadorian waters. In November 1996, the first US mission visited Ecuador and found that every effort was being made to use TEDs. Certification being an annual procedure, a second official inspection visit to Ecuador was made in March 1997. On 2 April, Ecuador learned that the report by the NMFS inspectors was negative and that the Department of State had decided to include Ecuador in the list of countries whose shrimp could not be imported to the United States as from 1 May 1997. Finally, after the Ecuadorian Government had made several efforts and following its request for re-certification, on receipt of a technical report on the inspection mission by the NMFS, on 30 May 1997, the Department of State announced the decision to lift the ban on imports of sea shrimp from Ecuador. In any event, this situation created a great deal of insecurity for shrimp exporters, who were subject to arbitrary measures that did not allow them the necessary predictability to pursue their commercial operations properly. Ecuador also noted that the "Galápagos" species of turtle was found only in Ecuador; this species was not aquatic and was protected since 1970. Three species of turtles nested in Ecuador, but only in the extreme north of the country, an area protected since 1979. The other turtles were pelagic and lived 30 to 40 miles off the coast, whereas shrimp were fished between 8 to 10 miles offshore. Thus, the United States imposed on Ecuador standards and procedures to protect turtles that were not found off its coasts.

4.21. The shrimp industry started up in Ecuador in 1968. In 1997, as a result of the efforts made by Ecuadorian enterprises, the utilization of existing natural resources and the training of Ecuadorian technicians, the production performance achieved by this sector made it one of the mainstays of Ecuador's economy, occupying the third place for foreign currency earnings after bananas and petroleum. Ecuador was currently the biggest producer in the western hemisphere and occupied second place at the global level. Shrimp production was mainly based on two activities:

4.22. The trend in exports of farmed shrimp in recent years was mainly due to improvements in technology. In 1991, for example, Ecuador had exported 79,029 metric tonnes for an amount of US$491.4 million, corresponding to an increase of 49.7 per cent in volume and 44.39 per cent in foreign currency in comparison with 1990. In 1992, it had exported a peak volume of 86,796 metric tonnes for an amount of US$525.7 million. In 1995 and 1996, production conditions had improved: 86,567 metric tonnes and 85,650 metric tonnes respectively had been exported, with high foreign exchange earnings of US$673.4 and US$624.3 million respectively for these two years. Between January and April 1997, the volume of exports had been 30,559 metric tonnes, equivalent to US$ 249.6 million, an increase of 25.12 per cent over the value for the period January-April 1996. In 1996, the major importers of Ecuadorian shrimp had been the United States with 51 per cent, Europe, 36.5 per cent, Far East with 10.1 per cent, and others with 2.4 per cent. In addition to contributing towards the development of Ecuador's economy, the shrimp industry also created skilled and unskilled jobs. The number of persons directly employed in this sector was estimated at about 150,000, and indirectly around 250,000.

4.23. Ecuador noted that the desirability of implementing a particular conservationist policy was not under discussion in this case since all countries agreed on the need to protect the planet's resources; the problem was how to implement this policy in practice. Obviously, relations between States had to be set within the framework of international law, and it could not be acceptable that one country's domestic policy objectives should be applied to other sovereign States. This principle of mutual respect among States was one of the keystones that had enabled mankind to achieve a relative degree of peace and prosperity in the second half of this century: this was a benefit that had to be carefully safeguarded. Nor was this case about establishing the degree of injury caused to the exports of countries that did not obtain certification. The problem was that this situation created serious insecurity for shrimp exporters, who were subject to arbitrary measures that did not allow them to have the proper predictability as to the future development of their trade operations.

4.24. Endorsing the legal arguments put forward by Thailand, Ecuador argued that the US legislation was inconsistent with its obligations under GATT 1994, specifically Articles I:1, III:4 and XI:1. Moreover, the embargo was not justified under the exceptions provided for in Article XX(b) and (g). Regarding Article I.1, Ecuador considered that a single product, shrimp, was treated differently according to the method used to take it. Shrimp taken without TEDs could not be imported into the United States. Furthermore, some countries had had several years to adapt their fishing practices to the provisions of US legislation, whereas others, including Ecuador, had had to do so in a few months, with the ensuing financial burden and training problems for fishermen. With respect to Article III:4, Ecuador submitted US shrimp fishing boats operating in Pacific Ocean waters did not appear to be obliged to use TEDs and their catch was marketed in the United States without any restrictions. This difference in treatment would constitute discrimination according to the principle of "national treatment". All shrimp producers should receive the same treatment as was accorded to US producers in the Pacific area, particularly if the species of turtles it was sought to protect did not exist in their countries. Ecuador considered that the United States was not complying with Article XI:1 because it was restricting imports of a product on the basis of domestic conservation policies and not duties, taxes or other charges. Previous panels had found that such prohibitions established by the United States in the past, for example in the Tuna cases, were contrary to GATT, and more specifically to Article XI:1. Lastly, the rules laid down by the United States could not be justified under Article XX(b) and (g). The scope of these provisions was explained in greater detail in the Tuna I Panel Report.

3. El Salvador

4.25. El Salvador stated that its interest in participating as a third party in this Panel stemmed from the fact that shrimps and shrimp products were an important part of its exportable supply of non-traditional products. The line of conduct pursued by El Salvador had been one of faithful respect and support for the multilateral principles and disciplines governing trade. El Salvador therefore considered that the application of unilateral and extraterritorial measures having a restrictive effect on trade were unacceptable and incompatible with the multilateral system. The reputation and credibility of the WTO, resulting from long years of negotiation which established a delicate balance of rights and obligations among Member countries, could be threatened by the application and maintenance of such measures. El Salvador trusted that the work of the Panel would uphold the fundamental principles and rules which made the multilateral system a bulwark for the liberalization of trade in goods and services and for the protection of its Members' trade interests.

4. European Communities

4.26. The European Communities ("EC") considered that this dispute did not relate to the desirability of protecting and conserving sea turtles, a species listed in Appendix I of the CITES and therefore generally recognized to be a species threatened by extinction. Rather, it concerned the methods employed to achieve conservation of sea turtles and in particular measures taken to ensure that other countries employed the same means as, or at least means comparable to, those employed by the United States. In this respect certain of the issues before this Panel were similar to those in issue before earlier panels, such as Tuna II. However, the issues raised were not identical in view, inter alia, of the particular status of sea turtles. The Panel was called upon once again to consider the scope of application of the exceptions contained in Article XX of GATT 1994. The case raised a number of important questions of general principle relating to international law and WTO law, and the circumstances in which Members could take measures to conserve what could be considered to be "shared global resources". The EC noted in this respect the first preambular paragraph of the Agreement establishing the World Trade Organization.

4.27. The EC shared the concerns about the imperiled status of sea turtles. However, it considered that, in general, the attainment of shared objectives relating to the conservation of global resources, including endangered species, should follow the process of international negotiation. The EC remained of the view that, as a general principle, it was not acceptable for a state to impose restrictions on trade in order to force other states to adopt certain measures or face economic sanctions which included the withdrawal of rights enjoyed under the WTO Agreements. This view was consistent with Principle 12 of the Rio Declaration on Environment and Development. The EC considered that there was a broad degree of consensus among the parties to the dispute as to the precarious status of sea turtles and the need to take steps for their preservation. Since sea turtles were listed on Appendix I of CITES the parties agreed to restrict trade accordingly. Moreover, as the United States pointed out, sea turtles were protected under the CMS. The EC did not intend to make detailed observations on the factual data submitted by the United States to the panel but would simply note that the factual evidence it had presented showed that the use of TEDs was, at least in some cases, a reasonable and effective solution to minimize the incidental killing of marine turtles resulting from certain fishing activities.

4.28. Turning to the legal aspects, the EC submitted that the United States apparently did not dispute there was a prima facie infringement of the GATT and, hence, that it had the burden of proving that the measures at issue could be justified under Article XX. With respect to the infringements to GATT 1994 alleged by the complainants, the EC observed that, whilst there were certain differences between the US legislation at issue in this case and that at issue in the Tuna II case, the basic features were similar. In particular, a country could not export certain wild-harvested shrimp to the US market unless it had been certified. This legislation was mandatory and the EC was of the view that it amounted to a quantitative restriction contrary to Article XI:1.

4.29. Regarding the US argument that the measure at issue was justified by Article XX paragraphs (b) and (g), the EC considered that, as ruled by the Appellate Body in the Gasoline case, the provisions of Article XX were "not changed as a result of the Uruguay Round of Multilateral Trade Negotiations".³⁸⁴ Article XX was an exceptional provision and the long standing practice of panels had been to interpret it narrowly, in a manner which preserved the basic objectives of the General Agreement. The EC supported the exhortations of the complainants to the effect that the General Agreement should be interpreted in the light of fundamental rules of treaty interpretation as codified in the Vienna Conventions on the Law of Treaties and recalled the recent ruling of the Appellate Body in the Gasoline case that "the General Agreement is not to be read in clinical isolation from public international law".³⁸⁵

4.30. Regarding the jurisdictional scope of Article XX, the EC recalled that in Tuna II, the Panel had concluded there was no valid reason for supporting the conclusion that either Article XX (b) or (g) applied only to policies in respect of things located or actions occurring within the territorial jurisdiction of the party taking the measure.³⁸⁶ Moreover, no jurisdictional restriction on use of Article XX was imposed by the Appellate Body in the Gasoline case. In the light of these rulings, the EC considered that Article XX could, in certain circumstances, be relied upon to justify measures taken to protect global commons (globally shared environmental resources) or resources located outside the territory of a Member, provided, of course, that the other conditions of application of the relevant exception in Article XX, and the introductory clause thereof, were complied with. However, such circumstances should indeed be exceptional. This followed from the fact that Article XX, as an exception to the rules of the General Agreement, should be construed restrictively, and from the fact that,in general international law, states could normally not apply their legislation so as to coerce other states into taking certain actions, including modifying their own domestic standards.³⁸⁷

4.31. The EC considered that current international law and practice showed that environment was one area where such exceptional circumstances could exist. In this field, the application of agreed rules beyond the normal jurisdictional limits of Members might indeed be necessary to ensure effective application of such rules. Hence, as noted by the United States, CITES prohibited trade in certain endangered species, including endangered species located within the jurisdiction of other countries and of countries which were not Parties to CITES. The EC did not deny that certain species, in particular migratory species, might require application of measures beyond usual jurisdictional boundaries. The EC noted in this respect that WTO rules should not hinder the pursuit of commonly shared environmental goals, including where such goals might justify the taking of measures against third parties. However, for the criterion that exceptional circumstances existed to be fulfilled, the EC submitted that a state had to be able to demonstrate it had made genuine and sustained efforts to seek a multilateral solution before taking the measures in question, as underlined by the Appellate Body in the Gasoline case. The EC noted that, in the absence of such a requirement, countries would be permitted to enforce their conservation policies on other countries by unilateral action. In this case, the United States asserted that it had proposed the negotiation of a multilateral agreement for Asia comparable to the Inter-American Convention, but that this proposal had not been accepted so far. No details were, however, given as to what steps had been taken, or the content of the Agreement the United States proposed should be negotiated. The EC observed that the short time period which elapsed between the rulings of the CIT and the imposition of the ban implied that there was little possibility to engage in genuine efforts to find a negotiated solution.

4.32. The EC noted, that whilst the United States relied on CITES and the provisions of other relevant international conventions, it did not demonstrate that the method which it imposed for shrimp fishing was required by CITES or by any other multilaterally agreed standard. The US submission was based solely on the assertion that, because the United States considered the use of TEDs to be the most effective method of protecting sea turtles during shrimp fishing, and because a regional agreement advocating the use of TEDs had been concluded, the required use of TEDs had become a "multilateral environmental standard", a concept whose precise meaning was unclear to the EC. To conclude, the EC considered that in order to justify unilateral measures outside the jurisdiction of a Member in pursuit of commonly shared environmental concerns, a Member had to demonstrate that it had made genuine efforts to reach an agreed multilateral solution. Such efforts were to go beyond the mere imposition of its own domestic standards on other Members. Moreover, the Member invoking Article XX had to demonstrate that it had no objective alternative to the unilateral measure taken.

4.33. With respect to Article XX(g), the EC agreed with the United States that sea turtles might be regarded as an "exhaustible natural resource". This followed from the definition of that term adopted in the Salmon/Herring³⁸⁸ and Tuna II cases, as well as the ruling of the Appellate Body in Gasoline. It followed also from the fact that sea turtles were included in Appendix I of CITES and protected under the CMS, which the EC considered to be relevant in interpreting the definition to be given to that term in Article XX(g). In the light of the Appellate Body's ruling in the Gasoline case, which confirmed on that point the Salmon/Herring Panel Report, it seemed clear that "related to" in this context meant "primarily aimed at". The United States asserted that Section 609 related to the preservation of sea turtles since it was intended to require that shrimp imported into the United States had not been harvested in a manner harmful to sea turtles. However, it seemed to the EC that the measure at issue was the import ban on shrimps. As was the case for the measures at issue in Tuna II, the desired effect of that measure would only be achieved if the ban on importation of shrimps was followed by changes in practices and policies of the exporting countries with respect to the manner in which shrimp was harvested. Hence, the manner the legislation was framed and the fact that, should exporting countries not change their practices and policies they were no longer allowed to export shrimps to the United States, showed that the purpose of the legislation was to require third countries to conform to the same standards as the United States. The EC noted in this regard that an interpretation of Article XX allowing the United States to impose unilateral trade restrictions in order to enforce its environmental standards would seriously undermine the General Agreement, in particular its vocation to serve as a multilateral framework for trade among Members. The EC argued that "in conjunction with" meant rendering "effective equivalent restrictions on domestic production". The EC noted that the burden of proving that this criteria was satisfied and that the purpose of the US measures was not merely the creation of equivalent conditions of competition for the domestic fishing industry, rested with the United States.

4.34. Turning to Article XX(b), the EC agreed, in the light the Tuna II case, that the protection of sea turtles was a policy which could come within Article XX (b). As to the term "necessary", the EC noted that previous panels had interpreted it as meaning that the measures taken were "indispensable" or "unavoidable".³⁸⁹ Furthermore, these panels emphasised that a Member was bound to use, among the measures reasonably available to it, that which entailed the least degree of inconsistency with other provisions of the General Agreement. The EC submitted that the United States had not demonstrated that, in view of their purpose, the measures taken could be considered to be "necessary" for the protection of animal life. More particularly, the United States had not demonstrated that the import ban was the only possible means of attaining its objectives with respect to sea turtle conservation; it was not clear that unilateral measures were indispensable and that a negotiated solution in respect of measures to protect sea turtles could not be found.

4.35. The EC considered that the question of compatibility with the chapeau of Article XX needed not be addressed since the United States had not demonstrated that the measures taken fell within one of the exceptions laid down in Article XX. To conclude, the EC considered that the United States measures under Section 609 constituted a quantitative restriction inconsistent with Article XI:1 of GATT 1994 and which were not justified by any of the exceptions in Article XX.

5. Guatemala

4.36. Guatemala submitted it shared the belief in preserving the environment and ensuring ecological sustainability. It therefore supported measures aimed in that direction, including those designed to preserve threatened species, as in the case of certain species of sea turtles. Guatemala recognized that it was desirable to achieve multilateral understandings in this regard. The WTO was the most appropriate forum for discussing and seeking trade agreements. Guatemala was concerned that the practice of adopting unilateral trade restrictive measures, as a form of disguised and legalized protectionism, could become widespread, especially when the countries applying such measures were those with developed economies which had greatest relative weight in the trade regulatory framework. The fundamental interest of Guatemala in this dispute was to ensure that the measures adopted by the United States to ban imports of shrimp and certain shrimp products did not serve as a precedent for other importing countries in future to apply measures aimed at indirectly and unilaterally restricting access to their market in a manner inconsistent with the provisions of the WTO, and particularly of GATT 1994.

6. Hong Kong

4.37. Hong Kong submitted that both the US legislation and its implementing measures violated Article XI:1 and could not be justified by Article XX of GATT 1994. According to constant GATT case-law, a Member could attack the legislation of another Member (independent of its eventual application) if the legislation as such did not leave any room for discretion to the implementing domestic authorities. Hong Kong did not intend to address the issue of whether the approach preferred by GATT panels so far should be also followed in the future as well. In Hong Kong's view, even if such legislation left discretion to the implementing authorities it could still run counter to that Member's international obligations to the extent that it permitted GATT-inconsistent action: this was the obligation of Members to implement bona fide their international obligations. But even if the most conservative, currently followed, approach were to guide the Panel's considerations in this respect, Hong Kong submitted that Section 609 left no room for discretion to the competent implementing authorities. The wording of Section 609 was unambiguous in this respect. Section 609 left some discretion to the competent US authority to exceptionally allow importation of shrimp and shrimp products from third countries following a certification to this effect: this meant that until the moment when certification was granted, the implementing US authority did not enjoy any discretion. Taking into account the fact that so far, except for the field of anti-dumping duties, GATT case-law knew of no remedies with an ex tunc effect, exporters found themselves in an awkward situation whereby they had to prove their innocence after having been convicted. This was why Section 609 as such should be condemned by the Panel as GATT-inconsistent. There was no doubt that the measures in application of such legislation should be condemned as well. Were, however, the Panel to follow a different route (by accepting, e.g., that the legislation at hand was purely discretionary), it should still find fault with the US measures in application of Section 609 for the reasons elaborated below.

4.38. Hong Kong submitted that the US arguments did not address specifically the issue whether the measures in question should be recognised as a border or as internal measures. The implication of this approach could be that Article XX of GATT 1994 be recognised as a stand-alone provision. This was, however, clearly not the case. As made plain by its title, Article XX provided the list of permissible exceptions to GATT's obligations laid down in the various provisions of the General Agreement. Moreover, previous GATT panels had consistently approached Article XX as an exception to GATT's obligations. Consequently, recourse to that provision should be made only if inconsistency with a GATT obligation had been previously established.

4.39. By requiring that "the importation of shrimp or products from shrimp which have been harvested with commercial fishing technology which may affect adversely such species of sea turtles shall be prohibited ...", Section 609 clearly violated Article XI of GATT 1994, since it established a quantitative restriction prohibited by the letter of that provision. Such actions could be eventually justified by recourse to the exceptions mentioned in the GATT and not to any other provisions. In such a case, the Member wanting to avail itself of such a possibility carried the burden of proof to demonstrate that an otherwise GATT-inconsistent measure could be justified by recourse to a GATT provision justifying such departures. In this context, it seemed that the only provision that could help justify the measure at hand was Article XX. Hong Kong submitted that the United States could not justify its action under Article XX in this case and urged the Panel to conclude accordingly. In Hong Kong's view, the US measures violated the chapeau of Article XX, did not meet the requirements of Article XX(b) as they were not necessary to protect animal life, and did not fall under Article XX(g).

4.40. Hong Kong recalled that, in its first interpretation of the chapeau of Article XX, the Appellate Body had noted that panels would first have to examine whether an allegedly GATT-inconsistent measure passed the test mentioned in the chapeau and then establish whether the other conditions (e.g., the "necessity" test in Article XX(b) of GATT) were met as well, in order to pronounce on the consistency (or inconsistency) of the measure under examination. Hong Kong agreed that this approach was in conformity with the wording of the chapeau: "Subject to ...". Hong Kong considered that the two requirements contained in the chapeau of Article XX meant that a WTO Member which wanted to avail itself of such a possibility would have to ensure that, for example in the context of environmental protection, it set standards which would be observed by domestic and foreign products alike: in other words, the chapeau of Article XX of GATT contained an Articles I and III-type obligation addressed to Members.³⁹⁰ This in turn meant that Members wanting to avail themselves of the possibility offered in Article XX would have to establish certainty concerning the competitive conditions in their market.

4.41. In stating that the chapeau of Article XX included an Articles I and III-type obligation, Hong Kong meant that once standards had been set by a Member in pursuance of an objective mentioned in Article XX, such standards would have to be observed in respect of both domestic and foreign products. In other words, while such standards of themselves constituted exceptions to the Member's obligations elsewhere under the GATT, their application to all Members had to be on equal footing (Article I), and to apply to domestic and foreign products alike (Article III). The GATT reflected at this point the lack of harmonization of the various policies mentioned in the body of Article XX among Members. Moreover, the GATT was neither an instrument for harmonization (i.e. all Members should pursue identical health/environmental policies), nor an instrument for deregulation (i.e. no Member could pursue any such policy). To the contrary, each Member pursuing its own health or environmental policy could justifiably depart from GATT obligations provided that it respected the conditions laid down in Article XX. In this sense, Article XX gave the "green light" to regulatory diversity among Members with respect to policies mentioned in its body. Consequently, Members wanting to avail themselves of such a possibility could reveal their "preferences". Such revealed preferences, though, would have to be enforced erga omnes, i.e. they would have to be respected for both domestic and foreign products.

4.42. Hong Kong argued that the US legislation failed to meet this requirement. Foreign producers, even after they had provided documentary evidence according to which they demonstrated that their regulatory program was comparable to that adopted by the United States, would still have to show that their average rate of incidental taking of sea turtles was comparable to that of US vessels. The word "and" which figured between the first two conditions mentioned in the supplementary information contained in the 1996 Guidelines for determining comparability of national programmes with the US programme made this point clear. Sub-section II of the Guidelines stipulated that incidental taking would be deemed comparable provided exporting governments required their fishing vessels to use TEDs in a manner comparable in effectiveness to those used in the United States. In Hong Kong's view, the United States was clearly not applying the same standards to foreign and domestic products, in that domestic producers did not have to meet any specific standard. Furthermore, the information on incidental taking would reach exporters to the US market only ex post and never ex ante. This meant foreign producers would continuously be in a state of uncertainty as far as their export possibilities to the US market were concerned. As mentioned above, it was precisely this form of uncertainty that the chapeau of Article XX aimed to outlaw.

4.43. Furthermore, under the US legislation, importation of shrimps harvested by individual shrimp trawl vessels in uncertified countries was prohibited even if de facto the vessels were fitted with the required TEDs. This meant individual foreign producers, even after having fully met the US requirements, would not be allowed to export shrimps to the United States. Hong Kong considered that the US measures were applied in a manner that constituted an arbitrary and unjustifiable discrimination between countries where the same conditions prevailed, thus violating the chapeau of Article XX. Were the Panel to agree with Hong Kong on the interpretation of the chapeau of Article XX and, consequently, find that the US measures at hand were inconsistent with the requirements of the chapeau, it needed not examine whether the US measures were justifiable under Article XX(b) or (g). However, were the Panel to adopt a different approach, Hong Kong would still urge it to find a case of inconsistency in that the US measures did not meet the requirements of Article XX(b), and Article XX(g) was not applicable to the measures.

4.44. Hong Kong noted that, for a measure to be justified under Article XX(b), it must be deemed necessary to achieve the stated objective (revealed preference). According to constant GATT case-law in this field, the "necessity" requirement was interpreted as obliging Members to take the least restrictive option in order to achieve the stated objective. The US action at hand was at the other end of the spectrum, since it amounted to an embargo. It should be pointed out that the panel reports on Tuna I and Tuna II, which concerned actions strikingly similar to the one at hand, had found the US measures to be GATT-inconsistent. Moreover, it was questionable whether TEDs were a necessary option in order to achieve the stated objective. Article XX imposed on Members an obligation of result: they could use any measure they deemed necessary in order to achieve the stated objective. This essential characteristic of Article XX should be preserved when Members adopting measures were about to establish equivalence of foreign standards to their own ones. This approach was in full conformity with the fact that the WTO did not impose on its Members harmonized approach to the policies mentioned in Article XX. Consequently, to impose TEDs on foreign producers who could, by means of other methods, reach an incidental rate of taking comparable to that reached by US vessels, would clearly be inconsistent with the spirit of Article XX. In other words, to the extent that alternative measures could be used without prejudging the desired level of the attainment of the objective, they should be accepted. This point was in line with previous GATT panel reports.³⁹¹

4.45. Hong Kong submitted that Article XX(g) was not applicable to the case at hand. Article XX(b) and Article XX(g) established two different legal standards; while the first one established the "necessity" requirement, the second merely requested that a measure be related to (i.e. without it being necessary) a stated objective. If there was an overlap in the coverage of the two paragraphs, then obviously Article XX(b) would have fallen into desuetudo, since Members wanting to avail themselves of the possibility of Article XX would always prefer the framework of XX(g) which established a much less stringent standard. Moreover, the wording of Article XX(g) "exhaustible natural resources" seemed to support their systemic conclusion: "exhaustible" meant "non reproducible". This interpretation was in full conformity with the Vienna Convention, whose principle of effective treaty interpretation required that by interpreting an agreement one should ensure that no term become redundant. An interpretation condoning an overlap between the coverage of Article XX(b) and XX(g) run counter to this principle.

4.46. Hong Kong argued that the US view on the absence of any jurisdictional limitation in the body of Article XX(b) and (g) relied on an erroneous application of public international law. The GATT was an international agreement and should be interpreted in accordance with customary principles of interpretation (Article 3.2 DSU). The GATT/WTO system had no jurisdictional clause. It did not, however, operate in a vacuum. There was no a priori division of jurisdiction at the international plane. Jurisdiction was defined at the domestic level. Public international law could only impose limits to such definitions. This principle was reflected in a myriad of instruments which dealt with this issue. Multilateral environmental agreements (MEAs) belonged to this category. For some externalities to be effectively addressed (and this was predominantly the case in the field of environmental protection), states should have recourse either to extraterritorial application of domestic laws, or to international treaties. The former could violate the relevant rules of public international law; the latter constituted a voluntary transfer of sovereignty. Hence, MEAs also defined the jurisdictional reach. It could be said that MEAs in effect served to address such externalities in a way consistent with public international law. This was also a clear recognition of the territorial limitations in Article XX, as GATT was an international treaty and operated within the realm of public international law. To conclude, there was no room for extraterritorial application of domestic laws in the context of Article XX.

4.47. As to the relevance of CITES to the present case, Hong Kong submitted that examination of any obligations under that Convention was outside the remit of the Panel because the US had not cited any such obligations as justifications for their measures. In any case, it should be noted that CITES concerned the regulation of trade in endangered species, and that the case before the Panel did not concern trade in endangered species but rather trade in shrimp. Also under no circumstances should incidental taking of sea turtles be equated to trade.

To Continue With Chapter 4.48

³⁸³ Report (1996) of the Committee on Trade and Environment, WT/CTE/1, 12 November 1996, paragraph 171.

³⁸⁴ Appellate Body Report on United States - Standards for Reformulated and Conventional Gasoline, adopted on 20 May 1996, WT/DS2/9, p. 18.

³⁸⁵ Ibid., p. 17.

³⁸⁶ With regard to the use to be made of unadopted panel reports, the EC referred to the statement of the Appellate Body Report on Japan-Taxes on Alcoholic Beverages, adopted on 8 November 1996, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, p.14-15 to the effect that whilst unadopted panel reports had no legal status in the GATT or WTO systems since they had not been endorsed through decisions of the Contracting Parties to GATT or WTO members, "a panel could nevertheless find useful guidance in the reasoning of an unadopted panel report that it considered to be relevant".

³⁸⁷ See Oppenheim's International Law, Ninth Edition, pp. 456-498.

³⁸⁸ Panel Report on Canada - Measures Affecting Exports of Unprocessed Herring and Salmon, adopted 22 March 1988, BISD 35S/98.

³⁸⁹ Panel Report on United States - Restrictions on Imports of Tuna, not adopted, DS29/R, circulated on 10 June 1994; Panel Report on United States - Section 337 of the Tariff Act of 1930, adopted 7 November 1989, BISD 36S/345; Panel Report on Thailand - Restrictions on Importation of and Internal Taxes on Cigarettes, adopted 7 November 1990, BISD 375/200.

³⁹⁰ Hong Kong noted these were the views of John H. Jackson, in The World Trading System (1989).

³⁹¹ Panel Report on United States - Section 337 of the Tariff Act of 1930, adopted on 7 November 1989, BISD 36S/345, paragraph 5.26.