The product/process distinction - an illusory basis for disciplining 'unilateralism' in trade policy

Abstract

It has become conventional wisdom that internal regulations that distinguish between products on the basis of their production method are GATT-illegal, where applied to restrict imports (although possibly some such measures might be justified as 'exceptions' under Article XX). The aim of this article is to challenge this conventional wisdom, both from a jurisprudential and a policy perspective. First, we argue there is no real support in the text and jurisprudence of the GATT for the product/process distinction. The notion developed in the unadopted Tuna/Dolphin cases that processed-based measures are somehow excluded from the coverage of Article III (National Treatment) and are therefore violations of Article XI (quantitative restrictions) is inconsistent with the text of this provision and the basic structure of the GATT. The real question is whether, under the National Treatment standard of Article III, products may be considered 'unlike' due to process-based differences. We argue that regulatory distinctions objectively related to actual non-protectionist policies are consistent with Article III, whether product- or process-based measures similarly to product-based measures under Article III. One concern is based on the conflation of process-based measures with measures that distinguish products not according to how they are actually produced, but rather according to their country of origin. We believe that country-based measures are likely to be violations of Article III and/or Article I of the GATT.

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