Clean Computer Campaign
November 24, 1999
Analysis of the AEA claims that the proposed European Directive on Waste from Electrical and Electronic Equipment (WEEE Directive) will conflict with the WTO trade rules.
1. Introduction
On August 17, 1999, the American Electronics Association (AEA) sent a memorandum to the European Commission entitled: "Legality under International Trade Law of Draft Directive on Waste from Electrical and Electronic Equipment." In this memorandum, the AEA claimed that certain provisions in the draft European Commission Directive on Waste from Electrical and Electronic Equipment (WEEE) would conflict with the international trade rules of the World Trade Organisation (WTO) Agreements. However, this new analysis of these claims – prepared by the Clean Computer Campaign – clearly demonstrates that the AEA arguments have been based on a number of misinterpretations of the WTO trade rules. The AEA’s misinterpretations have created a number of non-existent requirements and procedural rules that do not exist in the Agreements or in the WTO case law. Removing these misinterpretations leaves the AEA claims unfounded. In reality, the provisions in the draft WEEE Directive do not violate the international trade commitments of the European Community under the WTO Agreements.
The purpose of this memorandum is to present an analysis of the claims and arguments put forward by the AEA on the legality of the draft WEEE Directive and to clarify the interpretation of the substantive provisions in the WTO trade rules. This analysis is not designed to be a thorough interpretation of all the rules and provisions in the WTO Agreements that may be affected by the draft WEEE directive or an analysis of other parts of the draft WEEE Directive that the AEA has not questioned. The sole purpose of this memorandum is to point out the misinterpretations of the WTO rules contained in the AEA memorandum.
This memorandum begins with
an overview of the main AEA claims against the draft WEEE Directive. This
is followed by a brief introduction to the relevant WTO trade rules raised
by the AEA. In the following section, the AEA claims and arguments are
analysed and the misinterpretations clarified. This section is broken down
according to the four main claims by the AEA, on the substance bans, foreign
treatment facility requirements, national design and material choice rules,
and the nullification and impairment of trade concessions. The memorandum
ends with a brief conclusion.
2. The main claims of the AEA:
The AEA claim that the draft WEEE Directive would conflict mainly with three WTO Agreements: the General Agreement on Tariffs and Trade (GATT), the Agreement on Technical Barriers to Trade (TBT) and the General Agreement on Trade in Services (GATS). This section briefly introduces the relevant rules and provisions in these Agreements.
3.1 GATT
The GATT contains the general
rules and principles that govern how Member countries should treat internationally
traded products of other Member countries. These include the core principles
of non-discrimination, found in Articles I and III, and the elimination
of quantitative restrictions on trade, in Article XI.
3.1.1 Article I – Most-Favoured-Nation Treatment
Article I of the GATT covers the principle of non-discrimination between the products of Member countries. Its aim is to ensure that the products of all Member countries are treated equally by all other Member countries. Article I, in part, reads:
The National Treatment principle relates to the treatment given to foreign products once they have entered a Member country. Its aim is to eliminate discrimination between foreign and domestic like products. Article III(4), in part, reads:
Article XI aims to eliminate quantitative restrictions to trade. It reads, in part:
Article XX contains a list of ten circumstances, (a) through (j), under which Member countries can legitimately contravene the WTO'S core rules and provisions. Of these, paragraphs (b) and (g) are relevant this discussion. Article XX reads:
(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption."
(2) that the inconsistent measures for which the exception was being invoked were necessary to fulfil the policy objective; and
(3) that the measures were applied in conformity with the requirements of the introductory clause of Article XX."
(2) that the measures for which the exception was being invoked were related to the conservation of exhaustible natural resources;
(3) that the measures for which the exception was being invoked were made effective in conjunction with restrictions on domestic production or consumption; and
(4) that the measures were applied in conformity with the requirements of the introductory clause of Article XX."
(b) unjustifiable discrimination (with the same qualifier); or
(c) disguised restriction on international trade."
The Agreement on Technical Barriers to Trade (TBT) is one of twelve sub-Agreements annexed to the GATT. The purpose of the TBT is to ensure that mandatory product regulations and voluntary product standards are not used to create unnecessary non-tariff barriers to trade. Of particular interest for the WEEE Directive is Article 2.2, which reads:
3.3 GATS
The rules governing international trade in services are contained in the General Agreement on Trade in Services (GATS). According to Article I of the GATS: "trade in services is defined as the supply of a service:
The GATS does not contain
an exception equivalent to the GATT Article XX(g), "related to the conservation
of natural resources."
4. Analysis of the AEA Claims and Arguments
This section analyses the
claims and arguments put forward by the American Electronics Association
(AEA) on the legality of the draft WEEE Directive and clarifies the interpretation
of the WTO trade rule requirements. It is broken down according to the
trade conflict claims made by the AEA, i.e. substance bans, treatment facility
requirements, national design and material choice rules, and nullification
and impairment of trade concessions.
4.1 Substance Bans
According to the AEA, the
proposed bans on lead, mercury, cadmium, hexavalent chromium and certain
brominated flame retardants (PBBs and PBDEs) contained in Article 4(4)
of the draft WEEE Directive would violate Article XI of the GATT, which
prohibits quantitative restrictions on trade, and would not be justified
under the exceptions contained in Article XX of the GATT. The AEA further
claims that the substance bans violate the rules for technical regulations
in Article 2.2 of the TBT. These claims are based on a number of misinterpretations
of the requirements contained in the GATT and the TBT.
4.1.1 GATT
4.1.1.1 Article XI Quantitative Restriction
The AEA claims that the substance bans contained in the draft WEEE Directive fall within the scope of Article XI. The AEA argues that the substance bans in the draft WEEE Directive would constitute a "total import ban" on the importation of any electrical and electronic equipment into the EU that contained these substances. Therefore, the AEA argue, the substance bans would act as a quantitative restriction on imports, which would mean that they would fall within the scope of, and conflict with, Article XI of the GATT. Article XI prohibits quantitative restrictions on imports or exports to or from Member countries. While this interpretation seems straight forward, the truth is quite different. This claim is based on a level of certainty on the scope of Article XI that simply does not exist within the WTO. In reality, jurisprudence on the scope of Article XI is far from settled and Member countries continue to disagree over what Article XI should cover.
Certainly, Dispute Panels and the Appellate Body have found trade restrictive measures, such as the use of quotas and import licenses, as well as unilateral import bans, to be in violation of Article XI. On the other hand, the use of internal bans on specific substances contained in products has also been recommended as being consistent with the GATT. For instance, in "Thailand – Restrictions on Importation of and Internal Taxes on Cigarettes," the Dispute Panel noted:
Furthermore, it should be
pointed out that trade disputes can only be brought by the governments
of Member Countries. Only governments of Member countries may be party
to a dispute and only WTO Dispute Panels, and the WTO Appellate Body in
the case of appeals, have the right and responsibility of interpreting
the rules and provisions contained in these Agreements. This means that
the AEA does not have the right to interpret the trade rules or the right
to bring a dispute, no matter how much it feels that rules have been violated.
As it now stands, both the EC and US believe that internal substance bans
do not violate the trade rules. Therefore, there is no reason for them
to bring a trade dispute on this issue.
4.1.1.2 Article XX Exceptions
The AEA claims that the substance
bans contained in the draft WEEE Directive would not be justified under
Article XX(b) or (g), if the bans are found to violate Article XI. Under
paragraph (b), the AEA claim that: (1) "the policy in respect of the measures
does not protect human, animal or plant health;" and (2) "the measures
are not ‘necessary’ to fulfil the policy objective." For paragraph (g),
the AEA claim that: (1) "the substance bans do not fall within the range
of measures covered by Article XX(g);" and (2) the substance bans are not
related to the conservation of exhaustible natural resources."
4.1.1.2.1 Article XX(b) – Health Protection
The AEA claim that the policy in respect of the substance bans does not protect human, animal or plant health. This is due, they argue, to the fact that:
The AEA interpret this requirement to mean that for a policy to be justified under Article XX(b), it must successfully protect human health or the environment. This is completely different to the interpretation given by the Dispute Panel in the Gasoline dispute, which the AEA quote in their own background section of their memorandum. According to the Gasoline Panel, for a measure to be justified under Article XX(b), the country that has invoked the exception must establish: "that the policy in respect of the measures for which the provision was invoked fell within the range of policies designed to protect human, animal or plant life or health." This interpretation does not say that the policy must be a successful policy or that it must be applied to applications of the product, or that evidence in the form of "valid risk assessments" must be provided to justify its use. It only says that the policy must fall within the range of policies designed to protect human, animal or plant life or health. The banning of hazardous substances is a well established policy for protecting human, animal or plant life or health. Furthermore, the stated purpose of the draft WEEE Directive is "minimising the risks and impacts to the environment associated with the treatment and disposal of waste electrical and electronic equipment." As the risks and impacts associated with treatment and disposal of this waste include the risks to human, animal and plant life and health, the substance bans contained in the draft WEEE Directive would be justified under this first requirement of Article XX(b).
The AEA claims that the substance bans would not be "necessary" to fulfil the policy objective contained in Article XX(b). As AEA point out, the "necessity test" inherent in Article XX(b) has been interpreted by Panels to mean that a measure is only "necessary" if no alternative measure is available that could reasonably be expected to reach the same objective while at the same time being less trade restrictive or consistent with the rules of the GATT. The AEA argues the substance bans are not "necessary" because there are other less trade restrictive alternatives for reducing the risk these particular substances pose in waste electrical and electronic equipment.
In light of the definition of "measure" by the appellate body in the Gasoline case, however, it is now appropriate to question the validity of this tuna-dolphin interpretation of necessity. Rather than focusing on the necessity of the trade restriction (i.e. the restrictive aspect of the measure) it is more appropriate (and more consistent with recent WTO jurisprudence) to look at the broader measure itself, and its relationship to the environmental goal. In Gasoline, the appellate body explicitly stated that the "measure" to be examined under article XX is not merely the aspect of the measure that violated article III, but rather the whole measure. Thus, a better reading of article XX(b) requires examination of the relationship between the measure and the environmental goal only, and not its impact on trade. The impact on trade is examined under the chapeau. This interpretation, as well as following from the definition of "measure" in Gasoline, fits better with the shrimp-turtle appellate body's interpretation of article XX(g) as requiring an analysis of the nexus between the measure and the environmental goal, and the chapeau as requiring an analysis of the measures "application" - i.e. how it affects trade. Thus, "trade restrictiveness" should not be examined under the term "necessary" in article XX(b). To do so would be to contort the ordinary meaning of its words, apply a stronger trade discipline (as opposed to nexus requirement) to measures affecting human health than is applied to resources under article XX(g), and render the terms "arbitrary and unjustifiable" in the chapeau inutile and redundant.
To illustrate their point, the AEA claim that "selective landfill bans, waste management regulations and enforcement, recycling and eco-taxes" can be used to fulfil the same policy objective, while being less trade restrictive. However, while these policy instruments may reduce the risk these substances pose during and from waste treatment and disposal, it is questionable whether they would be able to reach the same level of protection that the substance bans would achieve. It is important to note that the TBT preamble confirms that countries are free to set their own appropriate level of protection. For instance, landfill bans or recycling requirements would not lower the risk of exposure from brominated flame retardants for workers in treatment and recycling plants. As a recent study in Sweden has shown, workers in these plants have been found to have elevated levels of these substances in their blood from exposure to waste electrical and electronic equipment. In such a case, a substance ban would be a more effective means of eliminating this risk. The same can be said for the other alternatives proposed by the AEA. None is capable to offering the level of long-term protection that can be reached with a substance ban.
The AEA claim that these alternative policy measures can achieve the same level of protection as substance bans is based on an unrealistic assumption. It is assumed that all waste electrical and electronic equipment will be collected and receive proper treatment and disposal. This is despite the fact that the draft WEEE Directive has only set a target of 4 kg on average per inhabitant per year from private households by January 2004. While it is uncertain what percentage of waste equipment this amount will represent, it is certain that it will not be 100%. Therefore, it is uncertain how much waste electrical and electronic equipment will continue to be disposed of in an improper manner. Furthermore, of the collected waste equipment, recovery targets range from only 70-90%. This still leaves 10-30% by weight of "lost" or wasted materials and substances. In the case of heavy metals and persistent pollutants, such as brominated flame retardants, these substances do not just disappear. Often they end up in the municipal waste stream where they receive improper treatment and/or are dispersed directly into the environment.
Furthermore, policy measures such as landfill and incineration bans are only as good as the collection systems that feed them. Even with well regulated systems, 100% enforcement is impossible to achieve, while even the latest mitigation methods (scrubbers for incinerators or liners and leachate catchment systems for landfills) are never 100% effective. This is not to mention waste electrical and electronic equipment that is mishandled or which falls outside of the official waste system. Such waste can be a significant non-point source for these hazardous substances.
Finally, proposal of eco-taxes as a viable alternative to the substance bans is based on the assumption that consumers have a choice between electrical and electronic equipment that contains these substances and equipment that does not. By applying eco-taxes in such a situation, the equipment that does not contain the substances would be more attractive for consumers, while equipment with the substances would be penalised. However, at the present time, there is very little material difference between different brands of electrical and electronic equipment. Therefore, rather than differentiating the market leading to the reduction of these substances, the result may as likely be just an increased cost of the product to the consumer. While this might reduce the amount of equipment sold by a marginal amount, it would have only a slight impact on the quantity of these substances passing through the society. Furthermore, for this situation to change the level of the eco-tax would need to be significant enough for it to become a noticeable and decisive element of purchasing decisions. Given the elasticity or inelasticity of the electrical and electronic equipment market, this level may need to be significant indeed, and even if it was significant it still may not be the only decisive purchasing element. Therefore, eco-taxes are not guaranteed to be as effective as substance bans at eliminating the use of specific substances.
Therefore, it is doubtful
that the policy measures put forward by the AEA as viable alternatives
to the substance bans would actually achieve the policy objective sought
by the European Commission. Certainly, this finding is backed up by countries
like Sweden and Denmark, which are both planning outright bans on the brominated
flame retardants covered in the draft WEEE Directive due to the fact that
all other measures to eliminate them have failed. From this perspective,
the substance bans contained in the draft directive would be justified
as "necessary" under Article XX(b) of the GATT.
4.1.1.2.2 Article XX(g) – Conservation of Exhaustible Natural Resources
The AEA claim that the substance bans would not be justified under Article XX(g). As already indicated, for a measure to be justified under Article XX(g), the Member invoking the exception must demonstrate that: (1) the policy in respect of the measure falls within the range of policies related to the conservation of exhaustible natural resources; (2) the measure is related to the conservation of exhaustible natural resources; (3) the measure is made effective in conjunction with restrictions on domestic production or consumption; and (4) the measure is applied in conformity with the requirements of the introductory clause of Article XX.
The AEA claim the substance bans will not be justified under Article XX(g) because "the substance bans do not fall within the range of measures covered by Article XX(g)." From this statement it is unclear to exactly which "range of measures" the AEA is referring. It seems that the AEA believes that there are a list of measures that are prohibited from being used to conserve exhaustible natural resources and that substance bans would be among this list. This belief is not backed up anywhere in the GATT Agreement or in the case law. On the contrary, the Article XX exceptions are exactly to allow Members to use otherwise GATT inconsistent measures to pursue overriding public interest concerns. As noted by the Appellate Body in the Shrimp dispute, "Paragraph (a) to (j) [of Article XX] comprise measures that are recognised as exceptions to substantive obligations established in the GATT 1994, because the domestic policies embodied in such measures have been recognised as important and legitimate in character." Any measure that is related to the conservation of exhaustible natural resources and applied in conjunction with restrictions on domestic production or consumption may be justified under Article XX(g).
The AEA further argues that the substance bans would not be allowed under Article XX(g) because they have an extraterritorial effect, i.e. that many of the resources conserved would be outside of the European Community. However, as the AEA memorandum indicates itself, "the Appellate Body Report in the Shrimp-Turtle case … did state that measures justified under the provision may affect jurisdictions outside that of the invoking country." The AEA goes on to argue that the use of substance bans with extraterritorial effect are not justifiable under Article XX(b) because the Appellate Body in this case did not except the use of an economic embargo to require other Members to adopt essentially the same comprehensive regulatory program as that in force within the Member’s territory. However, this argument is irrelevant to the substance bans in the draft WEEE Directive because the substance bans would not require other Members to adopt the same comprehensive regulatory program as proposed for the European Community. To force other Members to adopt the substance bans, the proposed WEEE Directive would have to condition entry of foreign produced electrical and electronic equipment on the adoption of similar bans in the countries of origin of the equipment. The Directive does not do this. Member countries outside of the European Community may still produce, market, sell and use electrical and electronic equipment that contain the prohibited substances. These bans are only effective on equipment produced within or imported into the European Union. That resources may be saved in other Member countries because of these bans, has no effect on the regulatory programs in those countries.
The AEA goes on to argue that extraterritorial measures covered by Article XX(g) "may be justified only under exceptional circumstances." Here, the AEA list four conditions and then claim that the substance bans do not meet these requirements. However, these "conditions" are based on non-existent requirements. Nowhere in Article XX(g) or elsewhere in the GATT Agreement are these requirements specified. Instead, these requirements, which the AEA imply are GATT case law, were a submission to the Appellate Body by one of the interested parties in the Shrimp appeal. The Appellate Body did not accept this argument and therefore the four conditions do not represent requirements for the justification of measures under Article XX(g), i.e. they are irrelevant.
The AEA claim that the substance bans are not related to the conservation of exhaustible natural resources. The AEA argue the substance bans are not related to the conservation of exhaustible natural resources because the bans are not "primarily aimed at" this objective. The AEA claim that WTO Panel practice has determined that for a trade-restrictive measure to be justified under Article XX(g), it must be "primarily aimed at" the conservation of an exhaustible natural resource, i.e. this must be the first and foremost purpose of the measure. The AEA argue that the substance bans are primarily aimed at protecting human health, not at conserving resources, therefore they cannot be justified under Article XX(g).
This argument is no longer valid. In the past, the term "related to" in Article XX(g) had been interpreted by Dispute Panels to mean that the measure had to be "primarily aimed at" conservation for it to be justified under Article XX(g). However, it was noted by the Appellate Body in the Gasoline dispute that "the phrase ‘primarily aimed at’ is not itself treaty language and was not designed as a simple litmus test for inclusion or exclusion from Article XX(g)." Shrimp, also, did not use this term when discussing "relating to". Therefore, there is no requirement that measures be "primarily aimed at" conservation of exhaustible natural resources for them to be justified under Article XX(g).
Furthermore, it should be noted that the invocation of Article XX(g) to justify the substance bans in the draft WEEE Directive (if they are found to be in violation of Article XI) need not be confined to the conservation of the substances themselves. As was seen in the Gasoline case, such environmental resources as clean air can be considered an exhaustible natural resource. Trade restrictive measures that are designed to conserve such resources (by limiting or removing hazardous substances) can be justified under the Article XX(g) exception. It can be assumed that "clean water" and "clean soil" would also qualify as exhaustible natural resources worth conserving.
In conclusion, it can be seen that the AEA has not presented any valid arguments for why the substance bans should not be justified under Article XX(b) or (g). Furthermore, it should be noted that the AEA has not claimed that the substance bans contained in the draft WEEE Directive will fail to meet the requirements contained in the introductory clause of Article XX of the GATT.
4.1.2 TBT
The AEA claim that the substance
bans contained in the draft WEEE Directive would conflict with requirements
on technical regulations contained in the TBT Agreement. However, it is
uncertain at this time if the substance bans would fall under the rules
and provisions in the TBT Agreement. Furthermore, the AEA claims are based
on a misinterpretation of these rules.
4.1.2.1 Technical Regulations
The AEA claims that the proposed substance bans are technical regulations as defined by the TBT Agreement. The AEA argues that since the TBT definition of "technical regulation" is similar to the European Commission definition of "technical specification," the TBT should be interpreted in the same way, i.e. that the substance bans should be defined as technical regulations. This is not a sound argument.
To begin with, it should be noted that EC law and WTO law are not the same. There are important and substantive differences between the two and their interpretation is, and should be, different. They are two different bodies of law based on different objectives, with two completely different case law histories. While efforts are made to make them compatible, they are not the same. Therefore, it is impossible to extrapolate the interpretation of one to the other.
Secondly, as indicated by
the AEA itself, to date no WTO Panel has examined the scope of the rules
or definitions in the TBT Agreement. Therefore, as there is no direct reference
in the TBT to substance bans being defined as technical regulations, it
is not possible to determine at this time whether or not a WTO Panel would
consider them as such. This is a matter for a WTO Panel or the Appellate
Body to decide, not the AEA. If a Panel finds that the substance bans do
not qualify as technical regulations within the meaning of the TBT Agreement,
then the rules and provisions of the TBT would not apply to them.
4.1.2.2 Article 2.2
In the event that the substance bans are found to be technical regulations under the TBT, and that they are found to be trade-restrictive, then they would have to satisfy the requirements found in Article 2.2 of the TBT. Article 2.2 requires: (1) that the objective of the technical regulation falls within the range of legitimate objectives set out in the Article; (2) that the technical regulation is not more trade-restrictive than necessary, taking account of the risks non-fulfillment would create; and (3) that the technical regulation is not prepared, adopted or applied with a view to or the effect of creating unnecessary obstacles to international trade. The AEA claims that the substance bans in the draft WEEE Directive do not meet the first two requirements of Article 2.2, i.e. that the objective of the substance bans are not a legitimate objective and that the bans are more trade restrictive than necessary considering the risks noon-fulfillment would create. These claims are based on a misinterpretation of the Article 2.2 requirements.
The AEA claim that the substance bans do not fulfil a legitimate objective. The AEA argues that because DGXI has not provided adequate evidence that the use of these substances in electrical and electronic equipment poses a threat to human health or the environment, or that this threat is any greater than in any other industry, DGXI has failed to demonstrate that the bans fulfil the legitimate objective of protecting human health or the environment. Essentially, the AEA is arguing that DGXI has failed to follow a procedural rule of providing evidence to justify a technical regulation prior to the preparation, adoption or application of the measure. This argument is based on a misinterpretation of Article 2.2. Nowhere in Article 2.2 are any procedural rules stated. Instead, Article 2.2 requires that the objective of the technical regulation falls within the range of legitimate objectives set out in the Article. Among the legitimate objectives listed is "the protection of human health and safety, animal or plant life or health, or the environment." The objective of the substance bans, as already mentioned, is the reduction of risk associated with the treatment and disposal of waste electrical and electronic equipment. The AEA has admitted as much themselves in their own memorandum, where they write: "evidence is abundant that DGXI prepared the bans with a view principally towards reducing the risks posed by the disposal in landfill and incinerators of consumer electronics." Therefore, it can be seen that the objective of the substance bans (i.e. reducing risks) is a legitimate objective under Article 2.2 of the TBT Agreement.
The AEA claim that the bans are more trade restrictive than necessary considering the risks noon-fulfillment would create. The AEA have broken the second requirement in Article 2.2 into two parts and interpreted them as containing two separate requirements, a "necessity test" and a "proportionality test". This part of Article 2.2 is based on the sentence: "technical regulations shall not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks noon-fulfillment would create." The AEA claim that the "necessary" in the first part of this sentence "must be interpreted in the same way as in the GATT, Article XX(b)," i.e. as a strict "necessity test" that would require Member countries to choose the least trade restrictive measure reasonably available to it. The AEA argue that because DGXI has not demonstrated that it has exhausted all available alternatives before imposing an import ban, nor encouraged international negotiations on this issue, the substance bans appear to be more trade-restrictive than necessary to achieve the objective.
However, the claim that the "necessary" in this sentence "must be interpreted in the same way as in the GATT, Article XX(b)" is erroneous, as is the interpretation of article XX(b), upon which it is based. First, as discussed above, the AEA’s arguments above on XX(b) are erroneous. Second, there is no rule or provision within the TBT Agreement that Article 2.2 should be interpreted as a strict necessity test nor has any Panel interpreted Article 2.2 in this way. Therefore, there is no rigid requirement that this Article is interpreted as a strict necessity test. In fact, international trade law experts have found that the addition of the second part of the sentence, i.e. "taking account of the risks noon-fulfillment would create," mitigates the harshness of the "necessary" in the first part of the sentence. Instead, the "necessary" has been interpreted as a test of "reasonableness" or "appropriateness" for achieving the legitimate objective, rather than as a strict necessity test as envisioned in Article XX(b) in the GATT. Beyond this, the same discussion applies to alternative measures as presented above. In addition, as a matter of common sense policy, requiring governments to negotiate with all countries whose exports are potentially impacted by internal regulations would stifle measures to protect health, impose unjustifiable costs and delays on public authorities and....undermine the legitimacy of the international trading system.
The AEA claim that the substance bans are not proportional to the objectives pursued by the policy, as required by the second part of the sentence. This they argue is due to the fact that DGXI has provided no substantial evidence on how the absence of the ban would risk the fulfillment of its policy. Nor has it carried out "specific and exhaustive scientific or technical studies on available alternatives to the banned substances," which "would require a systematic evaluation of the environmental, health and safety risks and/or advantages of possible substitutes." These arguments are again based on the establishment of a minimum procedural requirement that simply does not exist in the TBT Agreement.
Article 2.2 requires that "the risks noon-fulfillment would create" must be taken into account when preparing, adopting and applying technical regulations. Article 2.2 goes on to say that "in assessing such risks, relevant elements of consideration are, inter alia: available scientific and technical information, related processing technology or intended end-uses of products." Article 2.2 does not require that DGXI provide evidence (substantial or otherwise) that the absence of the substance bans will threaten the fulfillment of its policy. While the EC would need to provide evidence in the case of a dispute, there is no procedural requirement in the TBT that it provide this evidence during the preparation, adoption or application of a technical regulation. Furthermore, there is no requirement in Article 2.2 or anywhere else in the TBT Agreement that DGXI carry out "specific and exhaustive scientific or technical studies on available alternatives" or "a systematic evaluation of the environmental, health and safety risks and/or advantages of possible substitutes." In fact, the TBT does not insist that Member countries adopting technical regulations carry out any type of studies. The TBT requires instead that Members consider "available scientific and technical information," i.e. scientific and technical studies that have already been carried out. It also implies that the information may be from any source, i.e. it may be studies carried out in other countries. There is no requirement that a Member’s technical regulations must be based on studies carried out only in the place where the regulation will be adopted. As indicated by the Appellate Body in the Hormones case, such a requirement "could well lead to the elimination or disregard of available scientific evidence."
4.2 Treatment Facility Requirements
The AEA claim that the draft
WEEE Directive requirements on foreign treatment facilities would violate
the GATT, Articles I and XI, and the GATS, Article II. They argue that
these requirements would constitute a export ban, prohibited by Article
XI of the GATT, and would result in discrimination between Member countries
and between the service suppliers in Member countries, violating the GATT
and the GATS. These claims are unfounded.
4.2.1 GATT
4.2.1.1 Article XI - Quantitative Restrictions
The AEA claim that the foreign treatment facility requirements contained in Article 6(5) of the draft WEEE Directive would violate Article XI(1) of the GATT. The AEA argue that this is because the foreign treatment facility requirements "bans all exports of waste for treatment to countries where treatment facilities do not comply with the conditions imposed by the draft Directive itself for establishments within the Community." This argument is irrelevant for a finding of incompatibility with Article XI of the GATT.
The foreign treatment facility requirements contained in the draft WEEE Directive do not constitute a ban on exports of waste electrical and electronic waste. For a measure to be considered a quantitative restriction on exports, it must restrict the quantity of exports leaving the country. The WEEE Directive does not do this. Any amount of waste electrical and electronic equipment may be exported to qualified treatment facilities outside of the EU. There is no restriction on this amount. Therefore, the foreign treatment facility requirements in the draft WEEE Directive cannot be considered an export ban and therefore do not violate Article XI of the GATT.
The AEA claim that the
foreign treatment facility requirements would not be justified under Article
XX(b). The AEA argue that this is because the measure would have an
extraterritorial effect. This argument is based on the AEA belief that
"a country may not invoke the exceptions of Article XX to justify measures
that affect environmental and health protection outside its own jurisdiction."
This belief is unfounded. As explained above in the section on substance
bans, there is no restriction on the use of Article XX to justify measures
that have an extraterritorial effect, as the AEA itself has admitted. Therefore,
the fact that the foreign treatment facility requirements may have an extraterritorial
effect would not inhibit their justification under the Article XX exceptions.
4.2.1.2 Article I – Most Favoured Nation Treatment
The AEA claim that the
foreign treatment facility requirements would violate Article I of the
GATT on Most-Favoured-Nation Treatment. The AEA argue that since the
foreign treatment facility requirements would act as a ban on the export
of waste electrical and electronic equipment to countries where the equivalent
standards as those in the EU do not exist, while not restricting exports
of waste equipment to countries that do have equivalent standards, the
requirements would result in discrimination between Member countries, violating
the Most-Favoured-Nation principle contained in Article I of the GATT.
This claim is based on the argument that the foreign treatment facility
requirements constitute an export ban. As already indicated, these requirements
would not be an export ban to countries with different national standards
than the European Commission. The foreign treatment facility requirements
are not a requirement on the regulatory regimes of other Member countries
but on the specific treatment facilities. Therefore, as long as the treatment
facilities meet the requirements of the Directive, they can be used to
treat waste electrical and electronic equipment from the European Community,
regardless of the country or the country’s national standards. Therefore,
the foreign treatment facility requirements in the draft WEEE Directive
would not violate Article I of the GATT.
4.2.2 GATS
The AEA claim that the
foreign treatment facility requirements in the draft WEEE Directive would
violate Article II of the GATS. The AEA argues that the export ban
on waste electrical and electronic equipment to Member countries where
the equivalent standards do not exist would discriminate against treatment
service suppliers in those countries compared to suppliers in countries
with equivalent standards. This, the AEA claims, would violate the Most-Favoured-Nation
principle contained in Article II of the GATS. Once again, this argument
is based on the foreign treatment facility requirements being an export
ban. As already indicated above, these requirements do not constitute an
export ban. Nor are treatment suppliers discriminated against in Member
countries with different standards. It is not the regulatory regimes of
importing Member countries that is the issue. It is only the treatment
facilities and their compliance requirements as set out in the draft WEEE
Directive. Therefore, the foreign treatment facility requirements of the
draft WEEE Directive do not violate Article II of the GATS.
4.3 National Design and Material Choice Rules
The AEA claim that the national design and material choice rules contained in the draft WEEE Directive are an invitation to future trade disputes. This claim is not back up by any argument, nor has any substantive WTO rule or Agreement been sited as likely to be violated. Indeed, the AEA even admits that "the draft WEEE Directive’s provisions concerning national design and material choice measures may not be illegal, for they are merely instructions to Member States to take their own product standards measures."
The AEA claim that Article 7(6) of the draft WEEE Directive may violation the WTO Agreement on Government Procurement. Article 7(6) invites Member States to encourage producers to integrate an increasing quantity of recycled and used material in electrical and electronic equipment and to take this requirement into account with regard to national legislation on government procurement. Again, the AEA gives no justification for their claim and indeed, the claim is unfounded. To begin with, Article 7(6) does not violate any WTO rules. As with the national design and material choice rules, Article 7(6) is merely giving instructions to Member States. Secondly, an analysis of the WTO Agreement on Government Procurement shows that Member countries have considerable leeway for including environmental technical specifications and other environmental criteria in the process for awarding government contracts. Therefore, there is no reason to expect that Article 7(6) of the draft WEEE Directive will lead to an increased number of international trade disputes under the WTO.
4.4 Nullification and Impairment
The AEA claim that the draft WEEE Directive would nullify or impair trade benefits accruing to other Member countries in the sense of article XXIII(1)(b) of the GATT. The AEA argue that the European Community has made concessions on most of the products covered by the draft WEEE Directive over the last 50 years. Also, the European Community has committed to the Information Technology Agreement, which covers some of the products contained in the draft Directive. The AEA argue that since the requirements of the draft WEEE Directive could not have been known at the time these concessions were granted, "any provisions of the draft WEEE Directive that affect the import of products on which tariffs and other GATT concessions have been agreed could impair the benefits of other GATT contracting parties." The AEA goes on to list the substance bans, the recycled content rule (already removed from the third draft of the WEEE Directive), and the national design and material choice rules as provisions in the draft Directive that will lead to the nullification and impairment of third countries’ trade benefits. These claims are based on a misrepresentation of the concessions granted over the last 50 years and are therefore unfounded.
The trade concessions granted
by the European Community over the last 50 years have largely dealt with
the lowering and removal of import tariffs and quotas. For instance, the
Information Technology Agreement is designed to remove all import tariffs
on specific information technology products, such as computers, telecommunications
equipment and semiconductors, by January 2000. The benefits of this Agreement,
or other tariff concessions granted over the last 50 years, will not be
affected by the draft WEEE Directive because it does not change the status
of import tariffs. Nor does it set any quotas for electrical or electronic
equipment. Therefore, it will not nullify or impair any benefits that have
accrued to third countries from past trade concessions.
5. Conclusion
The AEA has claimed that several of the provisions in the draft WEEE Directive would violate substantive rules in the WTO trade Agreements if adopted in its present form. In particular, the AEA has claimed that the substance bans contained in Article 4(4) of the draft Directive will violate Article XI of the General Agreement on Tariffs and Trade (GATT) and will not be justifiable under the Article XX(b) or (g) exceptions. The substance bans will also violate Article 2.2 of the WTO Agreement on Technical Barriers to Trade (TBT). The AEA claim that the foreign treatment facility requirements contained in Article 6 of the draft WEEE Directive will violate both Articles I and XI of the GATT, as well as Article II of the General Agreement on Trade in Services (GATS). The AEA further claim that the Article 7(6) encouragement of recycled and used material in electrical and electronic equipment through government procurement may violate the WTO Agreement on Government Procurement. Finally, the AEA claim these provisions in the draft WEEE Directive will nullify and impair the trade benefits accrued to other Member countries from the trade concessions the European Community has granted over the last 50 years.
From an analysis of these claims and the arguments that the AEA has put forward, it has been found that all of these claims are unfounded and the arguments they are based on erroneous. These arguments have been based largely on misinterpretations of the WTO rules and provisions. These misinterpretations have led to the creation of procedures and requirements that do not exist or have never been established in international trade law. They are, therefore, incorrect.
It can therefore be seen that, far from violating the WTO trade rules, the draft WEEE Directive does not conflict with the international trade commitments of the European Community.
FOOTNOTES
1 Hunter, R. and Lopez Torres, M., "Legality under International Trade Law of Draft Directive on Waste from Electrical and Electronic Equipment," American Electronics Association Europe, Brussels, 17 August, 1999. (Hereafter AEA Memorandum).
2 See: WTO, Appellate Body Report on "United States – Import Prohibition of Certain Shrimp and Shrimp Products," WT/DS58/AB/R, adopted on 8 October, 1998, para. 119-120. (Hereafter Shrimp).
3 WTO, Appellate Body Report and Panel Report on "United States – Standards for Reformulated and Conventional Gasoline," WT/DS2/9, adopted on 20 May, 1996, para. 6.20. (Hereafter Gasoline).
4 Ibid., para. 6.35.
5 Gasoline, Appellate Body Report, p. 21.
6 WTO, Appellate Body Report on "Japan – Taxes on Alcoholic Beverages," WT/DS8/AB/R, adopted 1 November, 1996, p. 19.
7AEA Memorandum, p. 11.
8 See: GATT, Panel Report on "Thailand – Restrictions on Importation of and Internal Taxes on cigarettes," BISD 37S/200, adopted 1990, para. 77.
9 European Commission, "Draft Proposal for a European Parliament and Council Directive on Waste Electrical and Electronic Equipment: Explanatory Memorandum," Brussels, 5 July, 1999, p. 23.
10 "European Communities – Measures Affecting Asbestos and Products Containing Asbestos," Third Party Written Submission of the United States, 28 May, 1999, para. 36.
11AEA memorandum, p. 8.
12Ibid., p. 10.
13 Ibid., p. 12.
14 Ibid., p. 13.
15 Ibid., p. 8.
16 Gasoline, Panel Report, para. 6.20.
17 EC, Draft WEEE Directive, Third Draft, 5 July, 1999. Article 1.
18 AEA Memorandum, p. 11.
19 Sjödin et al., "Flame Retardants Exposure – Polybrominated Diphenyl Ethers (PBDEs) in Blood from Swedish Workers," Stockholm, 1999.
20 AEA Memorandum, p. 12.
21 Shrimp, Appellate Body Report, para. 121.
22 AEA Memorandum, p. 12.
23 Ibid.
24 Gasoline, Appellate Body Report, p. 16.
25 AEA Memorandum, p. 13
26 Ibid., p. 15.
27 Alanen, J., and Nieppola, T., "Legal Options and Obstacles for a Product-Oriented Environmental Strategy," Nordic Council of Ministers, 1999, in print.
28 AEA Memorandum, p. 15.
29 Ibid.
30 WTO, Appellate Body Report on "EC – Measures Concerning Meat and Meat Products (Hormones)," WT/DS26/AB/R and WT/DS48/AB/R, adopted 16 January, 1998, para. 190.
31 AEA Memorandum, p. 16.
32 Ibid., p. 17.
33 Ibid., p. 12.
34 Ibid., p. 17.
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