Regulatory convergence and dispute settlement in the WTO

Abstract

Purpose – This paper aims to examine the issues faced by the World Trade Organization (WTO) dispute settlement system in disputes involving questions of regulatory convergence. The traditional focus of the WTO has been on increasing market access and eliminating discrimination in trade. Now, as tariffs have been all but eliminated and Members rarely impose obviously discriminatory trade barriers, attention increasingly turns to questions of regulatory convergence. Leaving aside questions as to the overall benefits of regulatory convergence between markets, these developments pose a significant challenge to the organs of the WTO dispute settlement – and it is here that this paper focuses. Design/methodology/approach – While General Agreements on Tariffs and Trade (GATT)/WTO law has fairly well-developed tools for identifying discrimination in trade, the tools necessary for assessing whether regulatory measures maintain the requisite balance or proportionality between sovereign/domestic concerns and trade concerns are less clear. The paper discusses this latter point. Findings – The WTO agreements are frequently not clear on where or how this balance between sovereign/domestic concerns and trade concerns is to be determined. To date, WTO panels and the Appellate Body have preferred to focus on whether they can identify any discriminatory aspects of a measure. However, they will increasingly be called to pronounce on non-discriminatory regulatory policy choices of Members. Originality/value – This paper contributes to the literature on the Appellate Body, and argues that Members will need to develop a credible and consistent balance between policy space and trade restrictiveness.