Recently, a World Trade Organisation (WTO) Panel released its decision in the European Communities — Measures Prohibiting the Importation and Marketing of Seal Products concerning EU Regulation 1007/2009, which prohibits the import and placing on the market of commercial seal products with certain limited exceptions.  The dispute is the first WTO decision pertaining to an animal welfare measure under the public morals exception.  The WTO Panel has upheld a ban on seal products based on a rarely invoked public morals exception, but also found that the exceptions to the prohibition were administered improperly and as such are inconsistent with Articles 2.1 and 5.2.1 of the Agreement on Technical Barriers to Trade ("TBT Agreement") and Articles I:1 and III:4 of the General Agreement on Tariffs and Trade ("GATT").

Public Morals Is a Legitimate Objective to Justify a Ban

In making its decision, the Panel first found that the EU Regulation was a technical regulation and subject to the TBT Agreement.  Article 2.2 of this Agreement requires that technical regulations not be adopted with the effect of creating unnecessary obstacles to trade, which in turn requires that the regulations not be more trade-restrictive than necessary to fulfil a legitimate objective.  It then lists the relevant legitimate objectives. The EU claimed that the seal regulations address the EU's concern for the welfare of seals and that such concern is a legitimate objective.  But "public morals" is not included in the list of legitimate objectives in Article 2.2.  Because this heading is included as an (infrequently used) exception to justify measures that otherwise violates the GATT, this persuaded the Panel to consider public morals as a legitimate objective under the TBT Agreement.  In making the decision, the Panel considered EU public concern for seal welfare, the expressed ethical and moral considerations in relation to seals, and the effect the regulation had on reducing the demand for seal products within the EU.  As was required under Article 2.2, the Panel did consider whether there were alternative less trade restrictive measures, but found that these alternatives were not reasonably available considering the public moral risk, and that a Membercannot be reasonably expected to employ an alternative measure that involves a continuation of the very risk that the challenged measure seeks to halt.   The seal regulations were therefore consistent with Article 2.2 of the TBT. 

The Exceptions to the Ban Violate the WTO Rules

The Panel did find that the exceptions to the EU seal ban were applied inconsistently. While contesting the ban generally, Canada also alleged that its seal products were receiving less favourable treatment under the Inuit or other indigenous communities (IC) and marine resource management (MRM) exceptions contained in the EU Regulation when compared to like products originating in Greenland (products that are external to the EU) and like seal products originating in Finland and Sweden (products that are internal to the EU) which were both allowed in to the EU market. Yet the same exceptions within the Regulation effectively prohibit Canadian seal products. 

Article 2.1 of the TBT requires that technical regulations not discriminate against "like" foreign imports, and that imports of products from certain countries not be treated less favourably than imports of the "like" product from other countries.  These obligations are similar to obligations in the GATT. The Panel concluded that the exceptions were applied in manner that was inconsistent with Article 2.1 of the TBT and the non-discrimination provisions of the GATT and, as applies to the GATT, were not saved by the public morals exception in this instance.

Observations

The Panel decision upheld the European ban but found against the EU for certain exceptions to the ban contained in the Regulation.  Of significance, this decision for the first time includes animal welfare as a legitimate objective under the TBT Agreement and includes this objective under the "public morals" exception to the core obligations under the GATT.

This decision does not yet have legal force until adopted by the Dispute Settlement Body, and this will only happen 60 days after the decision should it not be appealed. Canada has stated that it will appeal the decision so any legally binding decision will not occur until early to mid-2014.  It remains to be seen whether the Appellant Body will consider animal welfare and public morals as a legitimate objective under the TBT Agreement, and whether it will add further clarity to when the public morals exceptions applies and in what circumstances. 

Sean Stephenson