The Right of States to Regulate in Risk-Averse Areas and the ECtHR Concept of Margin of Appreciation in the WTO US-Cool Article 21.5 Decision

Abstract:

This paper aims to explore the constituent grammars of the margin of appreciation as a concept, and the way it is used by world trade judges, as well as the reasons for, and the immediate and potential outcomes directly and indirectly arising from, the plea to the concept when deciding WTO disputes relating to domestic societal regulation.

In doing so, it is particularly important to demonstrate, through a detailed analysis of GATT and WTO jurisprudence, that GATT/WTO judges have applied the necessity test in order to follow different political agendas at different times – and also using the necessity narrative in various ways, including the hypothetical aim to ‘discipline’ members to regulate in the least trade-restrictive way possible.

Until the US-COOL Article 21.5 decision, under the TBT, world trade adjudicators, and especially the Appellate Body, added nuances to the necessity test with considerations related to the right of WTO members to regulate in order to set their own level of protection. The latest relevant interpretative development in US-COOL Article 21.5, namely the WTO Appellate Body’s plea for the margin of appreciation concept, may have interesting implications for future WTO jurisprudence. At least two scenarios are possible.

Either the Appellate Body has tacitly suggested in this ruling that members have certain discretion in considering what could constitute a legitimate objective of a particular regulation. Or the Appellate Body’s interpretation implies that the permissible degree of regulatory discretion of members actually rather depends on the importance of the objective to a member, and not – to a lesser extent – on its legitimacy, so the latter should not be placed under strict scrutiny.