Regulatory Autonomy Constraints From The National Treatment

PAPER NR. 30, FEBRUARY 2015

REGULATORY AUTONOMY CONSTRAINTS FROM THE NATIONAL TREATMENT OBLIGATION IN GATS

Bregt Natens

www.steunpuntiv.eu

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REGULATORY AUTONOMY CONSTRAINTS FROM THE NATIONAL TREATMENT OBLIGATION IN GATS

Bregt Natens

ABSTRACT

As in other areas of international economic law, the national treatment obligation, which prohibits a Member from granting a foreign service or service supplier treatment that is less favourable than that granted to a like domestic service or services supplier is a cornerstone of the General Agreement on Trade in Services (GATS). Even though the topic is well-explored in the context of trade in goods, the specifics of the GATS national treatment obligation—for example, its conditional nature and the requirement of likeness in the context of services and service suppliers—make a thorough assessment of Article XVII GATS necessary. This report addresses in an in-depth and systematic manner (i) the scope of the obligation; (ii) the likeness condition; and (iii) the less favourable treatment condition. In summary, it finds that the likeness analysis may allow for some room for manoeuvring to take regulatory purpose into account, whereas the less favourable treatment condition is to be interpreted on the basis of purely economic concerns. The report concludes with the obligation’s constraints on regulatory autonomy.

KEYWORDS

WTO, World Trade Organization, GATS, General Agreement on Trade in Services, services, national treatment, market access.

AUTHORS

Bregt Natens is PhD researcher at the Leuven Centre for Global Governance Studies and Institute for International Law (KU Leuven).

ADDRESS FOR CORRESPONDENCE

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© 2015 by Bregt Natens. All rights reserved. No portion of this paper may be reproduced without permission of the author. Working papers are research materials circulated by their authors for purposes of information and critical discussion. They have not necessarily undergone formal peer review.

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SAMENVATTING

Dit rapport bouwt voort op de vorige rapporten uit het onderzoekstraject ‘Het optimaliseren van

de liberalisering van de handel in diensten – Begrenzing van de autonome nationale

regelgeving?’ van pijler 1 ‘Internationaal en Europees recht’ van het Steunpunt ‘Buitenlands

beleid, internationaal ondernemen en ontwikkelingssamenwerking’ voor de Vlaamse regering.

Grensoverschrijdende handel in diensten wordt door zowel de Wereldhandelsorganisatie (WTO)

als door 'preferentiële' handelsakkoorden gereguleerd. Op beide niveaus is de Europese Unie

(EU) verplichtingen aangegaan die de handel in diensten liberaliseren en bijgevolg de nationale

regelgevende autonomie beperken. Er bestaat immers een inherente spanning tussen de

liberalisering van handel in diensten en nationale regelgevende autonomie: het

vergemakkelijken van handel vereist, op een of andere manier, het inperken van beleidsruimte.

Als gevolg van de fragmentering van de internationale regelgeving omtrent handel in diensten is

een complex web van verplichtingen ontstaan. Dat heeft geleid tot aanzienlijke onzekerheid

over de exacte reikwijdte van deze verplichtingen en, bijgevolg, over hun impact op nationale

regelgevende autonomie. Dit onderzoek analyseert de relevante bepalingen uit de Algemene

Overeenkomst betreffende de Handel in Diensten (GATS), gesloten in het kader van de WTO,

zoals deze van toepassing is op de EU. De complexe structuur en vaagheid van deze

overeenkomst heeft aanzienlijke ruimte voor debat over de reikwijdte van vele bepalingen uit

GATS gelaten. Daarna, en voortbouwend op deze analyse, wordt de impact van de

verplichtingen die voortvloeien uit een aantal handelsakkoorden van de EU op de nationale

regelgevende autonomie onderzocht.

In dit rapport wordt diep ingegaan op één van de belangrijkste verplichtingen uit GATS: de

verplichting tot nationale behandeling. De verplichting tot nationale behandeling wordt vaak als

hoeksteen van het internationaal economisch recht gezien. Een dergelijke bepaling komt voor in

de GATT 1994 en in veel bilaterale investeringsverdragen. (De focus op deze bepaling is

eveneens gelinkt aan de zeer interessante non-discriminatiebepalingen in de

vrijhandelsakkoorden van de EU, die het onderwerp van de volgende deliverable uitmaken.)

Het rapport zet vooreerst het toepassingsgebied van Artikel XVII GATS, dat de verplichting tot

nationale behandeling bevat, uiteen. Vervolgens wordt ingegaan de ‘likeness’ analyse. De

verplichting geldt immers alleen tussen diensten en dienstverleners die ‘soortgelijk’ zijn. De

rechtspraak omtrent de soortgelijkheid van diensten en dienstverleners is beperkt, maar men

kan ten rade gaan bij de rechtspraak omtrent dezelfde vraag voor wat betreft goederen. In dit

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rapport wordt voorgesteld om, voor wat betreft de soortgelijkheid van diensten, een aanpak te

hanteren die nauw aansluit bij de analyse voor goederen: een ‘competitieve soortgelijkheid’,

grotendeels gebaseerd op de competitieve verhouding tussen de diensten. Voor de

soortgelijkheid van dienstverleners wordt daarentegen gepleit voor een ruimer analytisch kader,

waarbij elementen van ‘beleidssoortgelijkheid’ (‘policy likeness’) kunnen meespelen, voor zover

dit gebeurt binnen de bestaande rechtspraak. Om te voldoen aan deze laatste voorwaarde kan

de ‘beleidssoortgelijkheid’ alleen spelen voor wat betreft de voorkeuren van consumenten en de

eigenschappen van de dienstverlener voor zover relevant voor het verlenen van de dienst

(beide elementen maken deel uit van de klassieke analyse van ‘competitieve soortgelijkheid’).

Daarna gaat het rapport in op de verplichting dat de behandeling gegeven aan buitenlandse

diensten of dienstverleners niet minder gunstig mag zijn dan deze die aan soortgelijke

binnenlandse diensten of dienstverleners wordt gegeven. Deze voorwaarde van ‘ongunstiger

behandeling’ (‘less favourable treatment’) werd recent opnieuw geïnterpreteerd door het

Appellate Body (AB), het hoger beroepsorgaan van de Wereldhandelsorganisatie, in de EC –

Seal Products zaak. In de lezing die in dit rapport wordt verdedigd, sloot het AB de deur om in

de analyse van ongunstiger behandeling niet-economische aspecten in overweging te nemen.

Het gevolg van deze rechtspraak is dat deze voorwaarde op louter economische basis wordt

beoordeeld aan de hand van de vroeg of de competitieve positie van de buitenlandse dienst of

dienstverlener door de maatregel werd beïnvloed ten nadele van deze dienst of dienstverleners.

In het ruimere kader van de compatibiliteit van een maatregel met het recht van de

Wereldhandelsorganisatie hoeft dit geen probleem te zijn: niet alleen is de verplichting tot

nationale behandeling alleen van toepassing voor zover een Lid specifieke verbintenissen in

haar Lijst opnam, maar de uitzonderingen in GATS laten toe dat een maatregel die de

verplichting tot nationale behandeling schendt, alsnog toegelaten is onder het GATS-regime.

Het onderzoek dat aan de basis ligt van dit rapport kadert in het programma ‘Steunpunten voor

Beleidsrelevant Onderzoek’ dat gefinancierd wordt door de Vlaamse Overheid. Wij danken de

Vlaamse Overheid voor de financiële steun en interesse in het onderzoek.

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REGULATORY AUTONOMY CONSTRAINTS FROM THE NATIONAL TREATMENT OBLIGATION IN GATS1

Bregt Natens

TABLE OF CONTENTS

Introduction ................................................................................................................................ 6

The national treatment obligation ............................................................................................... 7

1. The scope of the obligation ................................................................................................. 7

2. Likeness ............................................................................................................................. 9

2.1 Likeness of services and/or of service suppliers? .......................................................... 9

2.2 The ‘group’ of services and service suppliers versus the ‘like’ services and service

suppliers .............................................................................................................................12

2.3 Competitive likeness for services, competitive and policy likeness for service suppliers

to balance regulatory autonomy and trade liberalization .....................................................15

2.4 Likeness across modes of supply or methods of supply?..............................................23

3. Less favourable treatment ..................................................................................................26

3.1 A modification of the conditions of competition .............................................................28

3.2 The disparate impact test as the standard of less favourable treatment ........................33

Conclusion: constraints on regulatory autonomy .......................................................................35

Bibliography ..............................................................................................................................38

Case law ................................................................................................................................38

Books and chapters in books .................................................................................................40

1 This report is part of the Policy Research Centre’s research. It is to be situated in Pillar 1, International & European Law, Research Track 2, Making the Most of the Liberalisation of Trade in Services: Constraints on Domestic Regulatory Autonomy? This report, the sixth of this Research Track, addresses the impact of the national treatment obligation in GATS on regulatory autonomy in the EU and builds specifically on the first, third and fourth reports of this Research Track. The author wishes to thank professor Geert Van Calster for his comments and feedback on an earlier version of this report.

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Journal articles.......................................................................................................................41

Other documents ...................................................................................................................42

INTRODUCTION

The General Agreement on Trade in Services (GATS), which has a very wide scope,2 contains

two types of obligations.3 On the one hand, some unconditional obligations apply to all services

covered by GATS.4 On the other hand, conditional obligations only apply to sectors for which

specific commitments have been scheduled. This contribution addresses the impact on the

regulatory autonomy of the European Union (EU) of the one crucial conditional obligation: the

national treatment obligation. The interpretation of national treatment, a corner-stone of

international economic law is of utmost importance to an understanding of the law of the World

Trade Organization.

As indicated in the third report of this research track,5 the GATS preamble states that the

achievement of progressively higher levels of liberalisation of trade in services is desired to

promote ‘the interests of all participants on a mutually advantageous basis’. However, the

subsequent paragraph of the preamble recognises the right of WTO Members to regulate and to

introduce new regulation to meet national policy objectives. Moreover, although expanding trade

in services and promoting growth can be considered to be the main goals of GATS, the

preamble foresees the possible conflict between these goals and regulatory autonomy. The

preamble’s hybrid character illustrates that a balance between trade liberalisation and regulatory

autonomy needs to be struck. What is under scrutiny in this report, is how this balance is

shaped in the national treatment obligation. Therefore, the report first addresses the scope of

the national treatment obligation, before, second, delving into the likeness analysis. Third, an

2 For a discussion of the scope of GATS, see Bregt Natens and Jan Wouters, The Scope of GATS and of its Obligations (Policy Research Centre Foreign Affairs, International Entrepreneurship and Development Cooperation Research Paper 6, 2013). 3 Rudolf Adlung, ‘Public Services and the GATS’ (2006) 9 Journal of International Economic Law 455, 459. Adlung devises three categories: (i) unconditional general obligations; (ii) conditional general obligations, which apply only to sectors in which specific commitments have been undertaken; and (iii) specific commitments, taking into account scheduled limitations. However, for the purpose of this report, it is sufficient to distinguish between unconditional obligations on the one hand, and conditional obligations on the other. 4 Bregt Natens and Jan Wouters, Regulatory Autonomy Constraints from GATS’ Unconditional Obligations: The Case of the European Union (Policy Research Centre Foreign Affairs, International Entrepreneurship and Development Cooperation Research Paper 12, 2014). 5 See supra, note 2.

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evaluation of case law on less favourable treatment is made. Finally, by way of conclusion, the

constraints on regulatory autonomy from this interpretation are recalled.

It should be stressed that this report is part of a larger work in process, in which all other GATS

obligations and exceptions will be addressed in a similar way. In a subsequent step, the same

will be done for the services provisions of selected EU RTAs. The final outcome is the author’s

doctoral dissertation. Due to the in-depth nature of the analysis presented here, this report

covers a sole, but crucial, obligation.

THE NATIONAL TREATMENT OBLIGATION

1. The scope of the obligation

1. Article XVII:1 GATS requires Members to accord treatment no less favourable to services or

service suppliers of any other Member than the treatment it accords to its own like services or

service suppliers. The obligation applies to all measures affecting trade in services in sectors for

which specific commitments have been scheduled, and insofar as these commitments are not

subject to scheduled limitations.

2. The scope of the national treatment obligation is not limited to actual service suppliers. The

Panel in EC – Bananas III considered some potential service suppliers relevant to the

assessment of the national treatment obligation: vertically integrated companies, which in the

facts of EC – Bananas III are existing incumbents in the relevant market, are relevant potential

service suppliers.6 The AB did not explicitly address the issue of potential service suppliers, but

narrowed the Panel’s finding by referring only to existing banana companies, which did not at

the time but could nonetheless clearly supply the service, thereby limiting the scope of which

potential service suppliers can be considered.7 Note that this approach is similar to the first of

two submitted conditions advocated for above in the context of the governmental authority

exception. In Canada – Autos, the GATS-consistency of a measure granting import duty

6 European Communities – Regime for the Importation, Sale and Distribution of Bananas WT/DS27/R, Panel report adopted 25 September 1997 para. 7.320. 7 European Communities – Regime for the Importation, Sale and Distribution of Bananas WT/DS27/AB/R, AB report adopted 25 September 1997 paras. 223-227 as interpreted by Werner Zdouc, ‘WTO Dispute Settlement Practice Relating to the General Agreement on Trade in Services’ in Federico Ortino and Ernst-Ulrich Petersmann (eds), The WTO Dispute Settlement System 1995-2003 (Kluwer Law International 2004) 400.

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exemptions to a closed category of service suppliers, was under scrutiny.8 The Panel noted that

potential competition suffices to establish less favourable treatment.9 The AB did not uphold the

Panel finding that less favourable treatment, but did so because of different reasons.10 Taking

into account potential service supplies could mean that potential service suppliers, even lacking

capacity or ability to supply like services, can be like service suppliers to those who actually

supply the service.11 Still, these findings could have important repercussions for regulatory

autonomy, considering that if potential service suppliers have a right to non-discriminatory

treatment, the scope of the obligations as concerns regulations dealing with investment could

extend considerably, even if such regulations do not directly or predominantly deal with

services.12

3. An important territorial limitation to the scope of GATS is found in the 1993 and 2001

Scheduling Guidelines, where it is noted that Article XVII GATS does not require a Member to

extend the treatment to a service supplier located in the territory of another Member.13 This

applies only insofar as the measure entails positive action from the government.14 As will be

8 Canada – Certain Measures Affecting the Automotive Industry WT/DS139/R, WT/DS142/R, Panel report adopted 19 June 2000 para. 10.246. 9 Ibid para. 10.253. The AB criticised the Panel’s approach for a lack of examination, stating that the Panel made assumptions not based on factual evidence, and reversed these findings. Canada – Certain Measures Affecting the Automotive Industry WT/DS139/AB/R, WT/DS142/AB/R, AB report adopted 19 June 2000 paras. 172-174. 10 Canada – Autos (AB) paras. 181-182; see below. 11 Zdouc, ‘WTO Dispute Settlement Practice Relating to the General Agreement on Trade in Services’ 400. 12 Werner Zdouc, ‘WTO Dispute Settlement Practice Relating to the GATS’ (1999) 2 Journal of International Economic Law 295, 327. 13 General Agreement on Tariffs and Trade, MTN.GNS/W/164, Scheduling of Initial Commitments in Trade in Services: Explanatory Note (3 September) (1993) para. 10; S/L/92, Guidelines for the Scheduling of Specific Commitments under the General Agreement on Trade in Services (GATS) (Adopted by the Council for Trade in Services 23 March) para. 15. 14 Pietro Poretti, The Regulation of Subsidies Within the General Agreement on Trade in Services of the WTO: Problems and Prospects (Kluwer 2009) 142 at footnote 584 derives this from the language of the 1993 and 2001 Scheduling Guidelines. This interpretation seems correct. Bart De Meester and Dominic Coppens, ‘Mode 3 of the GATS: A Model for Disciplining Measures Affecting Investment Flows?’ in Zdenek Drabek and Petros C Mavroidis (eds), Regulation of Foreign Investment: Challenges to International Harmonization (World Scientific 2013) 136-137 offer a similar interpretation. For subsidies, this could mean that the granting of a subsidy to service suppliers in its territory (i.e. domestic service suppliers and service supplied through Modes 3 or 4) must not be extended to service suppliers located in the territory of another Member, i.e. for services supplied through Modes 1 or 2. See S/L/92 2001 Scheduling Guidelines para. 16; Poretti, The Regulation of Subsidies Within the General Agreement on Trade in Services of the WTO: Problems and Prospects 142. De Meester and Coppens, ‘Mode 3 of the GATS: A Model for Disciplining Measures Affecting Investment Flows?’ 136-137 differ on this point, stating that Mode 1 or 2 service suppliers may also need to granted the subsidy.

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explained below, regardless of the mode of supply, a like service supplied by a like service

supplier in the territory of the Member that enacts the measure, could claim national treatment.

2. Likeness

4. The interpretation of ‘likeness’, a term found in various key WTO provisions, remains highly

complex although the concept has been interpreted repeatedly in WTO case law. Its relevance

for regulatory autonomy is clear:

“the broader the WTO adjudicating bodies construe the concept of ‘likeness’, the

more intrusive the non-discrimination obligation becomes, which in turn intensifies

the obligation’s liberalizing effect”.15

Moreover, the interpretation of ‘likeness’ is crucial for the scope of regulatory autonomy because

Article XIV GATS, the general exceptions clause, does not include all legitimate policy

objectives that may require distinctions between services and service suppliers: hence, a

comprehensive analysis of likeness is necessary to avoid objectionable constraints on

regulatory autonomy.16

2.1 Likeness of services and/or of service suppliers?

5. The likeness tests in Articles II and XVII GATS both make reference to treatment granted to

“like services and service suppliers”. This brings to the fore a question on likeness in GATS: do

the services and the service suppliers need to be like, or does the likeness of one of both

suffice? This question has important repercussions in comparison with GATT 1994. On the one

hand, it “expands the prohibitive effect” as discrimination of foreign services suppliers is

prohibited, on the other hand, “it equally expands the permissive effect” as differences not

related to the service, but related to the service supplier, i.e. the ‘production or process’, “can

clearly justify at least certain forms of differential treatment”.17

15 Nicolas Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS (Cambridge University Press 2010) 2-3. Also see Martín Molinuevo, Protecting Investment in Services: Investor-State Arbitration Versus WTO Dispute Settlement (Wolters Kluwer 2012) 97. 16 Frieder Roessler, ‘Increasing Market Access Under Regulatory Heterogeneity: The Strategies of the World Trade Organisation’ in OECD (ed), Regulatory Reform and International Market Openness (OECD 1996) 121-122. 17 Joost Pauwelyn, ‘The Unbearable Lightness of Likeness’ in Marion Panizzon, Nicole Pohl and Pierre Sauvé (eds), GATS and the Regulation of International Trade in Services (Cambridge University Press 2008) 359 (emphasis original).

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6. The Panels in EC – Bananas III and Canada – Autos were the first to address likeness in

GATS. In assessing whether the wording of the test constitutes a double requirement of

likeness of both service and service supplier, these Panels stated respectively that “at least to

the extent that entities provide these like services, they are like service suppliers” and “to the

extent that the service suppliers concerned supply the same services, they should be

considered “like” for the purpose of this case”.18 It must be stressed that in both cases, the

respondent did not claim that the services and service suppliers were not like, and the

interpretation of likeness was not a decisive issue.19 However, the approach taken in these

cases appears circular as it defines the likeness of the service supplier on the basis of the

likeness of the service.20 In a later case, the Panel’s attention shifted focus towards the likeness

of the service supplier, arguing that

“when origin is the only factor on which a measure bases a difference of treatment

between domestic service suppliers and foreign suppliers, the "like service

suppliers" requirement is met, provided there will, or can, be domestic and foreign

suppliers that under the measure are the same in all material respects except for

origin”.21

In China – Electronic Payments Services, a more detailed analysis of likeness was undertaken.

The Panel unsuccessfully asked the parties, the U.S. and China, to provide the Panel with

relevant criteria or an analytical framework to establish likeness—and took the AB’s earlier

words of caution as to the transposition of trade in goods case law to trade in services into

deliberation.22 The Panel assessed likeness by looking at the ordinary meaning of the words

and the context of the phrase ‘like services’. The Panel concluded that “a likeness determination

should be based on arguments and evidence that pertain to the competitive relationship of the

services being compared”.23 Consecutively, the Panel turned to the likeness of the service

suppliers, noting that the analysis of the Panels in EC – Bananas III and Canada – Autos on the

automatic likeness of services suppliers in case they provide like services is to be read as a

18 EC – Bananas III (Panel) para. 7.346; Canada – Autos (Panel) paras. 10.247-10.248. Such a presumption that service suppliers are like if they supply like services was also coined in the 1997 article by Aaditya Mattoo, ‘National Treatment in the GATS: Corner-Stone or Pandora's Box?’ (1997) 31 Journal of World Trade 107, 133. 19 Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 196. 20 Zdouc, ‘WTO Dispute Settlement Practice Relating to the General Agreement on Trade in Services’ 398. 21 China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Products WT/DS363/R, Panel report adopted 19 January 2010 paras. 7.975-7.976; confirmed in China – Measures Affecting Electronic Payment Services WT/DS413/R, Panel report adopted 31 August 2012 para. 7.695. 22 China – Electronic Payment Services (Panel) para. 7.698. 23 Ibid paras. 7.699-7.702. The Panel conducts the analysis once, but refers to it for two distinct services which are under scrutiny in the same case, reaching the exact same result in all three instances.

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presumption, and that in the specific circumstances of the case, the presumption did not hold.24

The Panel held that it is sufficient for the complainant to raise a presumption that the services or

service suppliers are “essentially the same in competitive terms”, and that it is up to the

respondent to rebut such assertion.25 Both for likeness of services and of service suppliers, the

actual analysis of competitive relationship focused on the perceived competition of the domestic

service and service supplier by the foreign service supplier, and on the service suppliers’

description of their business scope and specific services they provide.26

7. The Panel’s approach in China – Electronic Payment Services thus distinguishes between

the likeness of services and that of service suppliers: it does not accept automatic likeness of

the service suppliers if the services are like. This is of crucial importance for the issue of

regulatory autonomy, as it creates leeway for governments to distinguish between different

service suppliers who supply a like service.27 This gives some necessary weight to the

importance of supplier regulation, which can be taken into account when assessing likeness.28

The Panel also solved the question as to whether there should be a mutually dependent

interpretation of likeness for services and service suppliers,29 answering in the negative.

8. However, the Panel does not explicitly pronounce on whether the likeness test for services

and that for service suppliers is a cumulative one. It seems possible that a like service is

supplied by unlike service suppliers, as indicated by this Panel’s approach,30 and it can equally

be imagined that like service suppliers supply unlike services. Henceforth, the question is

whether a non-discrimination obligation could be violated if either the service or the service

supplier is unlike, but they are not both? Although several approaches have been presented in

24 Ibid para. 7.705. 25 Ibid paras. 7.704 and 7.708. 26 Ibid paras. 7.703 and 7.706. 27 Gaëtan Verhoosel, National Treatment and WTO Dispute Settlement: Adjudicating the Boundaries of Regulatory Autonomy (Hart 2002) 61; Kalypso Nicolaïdis and Joel P Trachtman, ‘From Policed Regulation to Managed Recognition in GATS’ in Pierre Sauvé and Robert M Stern (eds), GATS 2000: New Directions in Services Trade Liberalization (Brookings Institution 2000) 252-255; Markus Krajewski, National Regulation and Trade Liberalization in Services (Kluwer Law International 2003) 104; Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 198. 28 Krajewski, National Regulation and Trade Liberalization in Services 106. 29 See Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 197-204. 30 China – Electronic Payment Services (Panel) para. 7.705.

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scholarship,31 future case law will have to clarify this issue. Whatever the relationship between

likeness of services and of service suppliers, it seems clear that sufficient individual attention

needs to be given to both—thereby giving deference to regulatory autonomy.32 Nonetheless, it

is true that drawing the line may not be possible to draw and an overly artificial distinction

should be avoided.33

2.2 The ‘group’ of services and service suppliers versus the ‘like’ services and service suppliers

9. The following example, borrowed from an early, principal contribution on Article XVII GATS,

demonstrates a crucial issue in the context of likeness:34 consider a country making full national

treatment commitments on ‘passenger transportation services by road’, that subsequently

imposes a higher tax on foreign suppliers of these services than on domestic ones. Say that

almost all foreign suppliers are taxis and almost all domestic suppliers are buses. If a passenger

transportation service by road is a passenger transportation service by road, a tax on taxi

services, but not on bus services would violate Article XVII GATS because the tax causes a

detrimental impact on foreign suppliers of passenger transportation services by road vis-à-vis

like domestic service suppliers. The result is that “the “likeness” criterion is immune to regulatory

distinctions based on the precise type of passenger road transportation service”.35 However, if

the service is not ‘passenger transportation by road’, but ‘taxi services’, the foreign taxi service

suppliers need to be compared to the domestic taxi service suppliers, who are accorded the

same treatment.

10. Therefore, the first step in the likeness analysis is the identification of the ‘group’ of services

or service suppliers that is to be compared.36 This aspect of the likeness analysis is obfuscated

31 They are (i) a cumulative test, (ii) an alternative test, which may be either a combined approach or a disjunctive approach, or (iii) a merged test. See, for an extensive overview, Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 204-219. 32 As noted by Bart De Meester, ‘Testing European Prudential Conditions for Banking Mergers in the Light of Most Favoured Nation in the GATS’ (2008) 11 Journal of International Economic Law 609, 626 at footnote 68. 33 Mireille Cossy, Determining "Likeness" under the GATS: Squaring the Circle? (World Trade Organization Economic Research and Statistics Division Staff Working Paper ERSD-2006-08, 2006) 11-12. 34 Mattoo, ‘National Treatment in the GATS: Corner-Stone or Pandora's Box?’ 122. 35 Ibid. 36 European Communities – Anti-Dumping Measure on Farmed Salmon from Norway WT/DS337/R, Panel report adopted 15 January 2008 para. 7.51, noting in the context Article 2.6 of the Anti-Dumping Agreement that:

“it must be known what the comparator is, before any assessment can be made as to whether another product is “identical” to or, in the absence of an identical product, “has characteristics closely resembling those of” the imported “product under consideration”“.

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because of terminological issues: the term ‘like product’ is frequently applied to this first step.37

It has been argued convincingly that what follows, based on a goods context, equally applies to

Article XVII GATS.38 The AB has explained, in the context of the EU and U.S. row over aircraft

subsidies under the SCM Agreement, that a panel must assess

“whether it was appropriate to examine all Airbus [large civil aircraft (LCA)] as a

single “subsidized product” and all Boeing LCA as a single “like product” for

purposes of its adverse effects inquiry. The Panel was also required to assess the

European Communities' allegation that there are, in fact, five distinct product

markets of Airbus and Boeing LCA, and should have reached a conclusion as to

whether any of the parties' or a different “product market” definition was appropriate

for purposes of its displacement analysis”.39

The AB continued, noting that the panel was obliged to define “the relevant product market and

the scope of the respondent's subsidized product that is in competition with the complainant's

like product”, on the basis of inter alia demand-side and supply-side substitutability, and cross-

price elasticity.40 In the context of Article III:4 GATT 1994, this relevant product market is said to

ask “a question about the relationships among the things that are reasonably to be considered

together and collectively as ‘a product’”.41 The product market may be construed more widely

(with relatively heterogeneous things),42 or narrowly in a specific case.43 For example, in

Also see, implicitly, European Communities – Measures Affecting Asbestos and Asbestos-Containing Products WT/DS135/AB/R, AB report adopted 5 April 2001 para. 100, noting that the group of imported products must be compared with the group of like domestic products; United States – Measures Affecting the Production and Sale of Clove Cigarettes WT/DS406/R, Panel report adopted 24 April 2012 para. 7.124, dubbing the group of relevant products the ‘like products’; United States – Measures Affecting the Production and Sale of Clove Cigarettes WT/DS406/AB/R, AB report adopted 24 April 2012 para. 192, referring to the ‘universe of domestic products’ (the issue was crucial in this report, see paras. 191-200); United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products WT/DS381/R, Panel report adopted 13 June 2012 para. 7.227, referring to ‘the products at issue’. I adopt the terminology ‘group’ as the AB in e.g. US – Clove Cigarettes (AB) para. 194 and as used in James Flett, ‘WTO Space for National Regulation: Requiem for a Diagonal Vector Test’ (2013) 16 Journal of International Economic Law 37 46-47. 37 Flett, ‘WTO Space for National Regulation: Requiem for a Diagonal Vector Test’ 47. 38 This is the central proposition in James Flett, ‘National Treatment under the General Agreement on Trade in Services (GATS)’ in Anselm Kamperman Sanders (ed), The Principle of National Treatment in International Economic Law: Trade, Investment and Intellectual Property (Edward Elgar 2014). As addressed below, for both Articles III:4 GATT 1994 and XVII GATS, I however differ with Flett, who published before the AB report in EC – Seal Products was released, on the relevance of regulatory distinctions in the less-favourable treatment analysis. 39 European Communities – Measures Affecting Trade in Large Civil Aircraft WT/DS316/AB/R, AB report adopted 1 June 2011 para. 1131. 40 Ibid para. 1134. 41 Flett, ‘WTO Space for National Regulation: Requiem for a Diagonal Vector Test’ 46. 42 By analogy, see EC – Salmon (Norway) (Panel) paras. 7.53-7.59.

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establishing the ‘like product’ in the context of Article 2.1 of the Anti-Dumping Agreement, the

Panel in EC – Salmon (Norway) noted that “The mere fact that a dumping determination is

ultimately made with respect to “a product” says nothing about the scope of the relevant

product”.44 A wider or narrow scope to the product market should not lead to a different result as

long as, and this is imperative, the same things are included from the domestic and import

sides.45 The complainant and respondent in a dispute can propose product markets, a panel

may have to settle in case of disagreement on the basis of competition based criteria, ensuring

that the product market is ‘an appropriate basis’.46 Care should nonetheless be taken, 47 as the

Panel in Korea – Alcohol Beverages made clear, as market definitions may differ between

competition law and trade law.48

43 Flett, ‘WTO Space for National Regulation: Requiem for a Diagonal Vector Test’ 46 47, where Flett argues that this is the ‘accordion of likeness’ from Japan – Taxes on Alcoholic Beverages WT/DS8/AB/R, AB report adopted 1 November 1996 20-21. 44 EC – Salmon (Norway) (Panel) para. 7.48. 45 Flett, ‘WTO Space for National Regulation: Requiem for a Diagonal Vector Test’ 46-47. Also see pages 88-89, where the author notes that

“The existence of discrimination, including de facto discrimination, is a serious matter. It should not excessively depend on the assumptions that are used to define the market, but should endure even when the market definition is varied within reasonable parameters as part of a sort of sensitivity analysis. Provided that panels ensure that their approach to the question of what is the product falls within this acceptable range of possibilities there should be no legal error, and no need for litigants to trouble the Appellate Body with fact intensive argument about market definition”.

According to Pauwelyn, ‘The Unbearable Lightness of Likeness’ 360-361, this even applies to the likeness analysis as a whole, stating that “”likeness” is only the trigger or threshold, not the substantive test.” 46 Flett, ‘WTO Space for National Regulation: Requiem for a Diagonal Vector Test’ 47-48. See Adrian Emch, ‘Same Same But Different? Fiscal Discrimination in WTO Law and EU Law: What Are ‘Like’ Products?’ (2005) 32 Legal Issues of Economic Integration 369, 382-395 and 397 for an overview of competition law analytical tools of determining the relevant market (here with regard to consumer tastes and habits, and physical characteristics). 47 Jonell B Goco, ‘Non-Discrimination, ``Likeness'', and Market Definition in World Trade Organization Jurisprudence’ (2006) 40 Journal of World Trade 315, 332. 48 Korea – Taxes on Alcoholic Beverages WT/DS75/R, Panel report adopted 17 February 1999 para. 10.81. The Panel notes that:

“trade law addresses the issue of the potentiality to compete. Antitrust law generally focuses on firms' practices or structural modifications which may prevent or restrain or eliminate competition. It is not illogical that markets be defined more broadly when implementing laws primarily designed to protect competitive opportunities than when implementing laws designed to protect the actual mechanisms of competition”.

For a critical analysis of this finding, see Henrik Horn and Petros C Mavroidis, ‘Still Hazy after All These Years: The Interpretation of National Treatment in the GATT/WTO Case-law on Tax Discrimination’ (2004) 15 European Journal of International Law 39, 66-67. These authors note that “When applying Article III the adjudicating bodies [of the WTO] find themselves in basically the same situation as competition authorities”, and that panels can learn a fair amount from the approach taken by competition authorities.

15

11. It is true that it is difficult to delineate this prior step with the actual likeness analysis, as

there is an overlap with the actual likeness analysis set out below.49 According to the main

proponent of this approach, the actual ‘likeness’ analysis between the relevant groups is

“the comparison between the treatment of the imported product and the treatment of

the domestic product [which] requires the import and domestic categories to be

described in terms that are identical in all respects. One cannot meaningfully test for

de facto discrimination unless the data sets on each side of the comparison are

objectively and even-handedly defined and compiled by reference to criteria that are

identical in all respects”.50

Although this approach is highly relevant to keep in mind when assessing likeness, it has not

been followed in GATS case law. It should therefore, for now, perhaps mainly serve as a

reminder of the importance of the delineation of the groups of services or service suppliers that

are to be compared. Future case law should undoubtedly further clarify this issue, be it in the

goods or services context.

2.3 Competitive likeness for services, competitive and policy likeness for service suppliers to

balance regulatory autonomy and trade liberalization

12. As noted in a leading contribution on likeness in GATS, neither panels nor the AB have had

the need to delve into the issue of likeness: in the first two cases on likeness the respondents

did not dispute the likeness of services and service suppliers, and in the latter two cases the

assessment of likeness of service suppliers was relatively straight-forward.51 Consequently, the

current approach to determining likeness in the case of Articles II and XVII GATS appears to

assess only the competitive relationship between the services and service suppliers, and do so

in a relatively narrow sense. This may be the case because it was simply not necessary for the

panels to assess likeness into more detail, as “the issue of ‘likeness’ was not the critical element

of the analysis”.52 Hence, it sufficed for the analysis to focus on a narrow notion of competitive

49 See, for example, Ole Kristian Fauchald, ‘Flexibility and Predictability Under the World Trade Organization’s Non-Discrimination Clauses’ (2003) 37 Journal of World Trade 443, 467-471, where the question ‘which products are to be compared’ is addressed without going into the step of first defining the relevant product, before one can compare to like products. 50 Flett, ‘WTO Space for National Regulation: Requiem for a Diagonal Vector Test’ 47 (emphasis omitted). 51 Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 195-196, to which one may add likeness in the case of China – Electronic Payment Services (Panel). 52 Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 195.

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relationship. This may however be very different in cases of measures which are at face origin-

neutral.53

13. Moreover, a narrow focus on competitive relationships is problematic. It is true that the

current case law is in line with the firm rejection of the ‘aims and effects’ test in the analysis of

Articles II and XVII GATS by the AB.54 A strict reading of this rejection results in a narrow base

for the determination of likeness, which may miss out on important factors and may therefore

lead to excessive liberalisation vis-à-vis what is necessary to the objective of these obligations,

i.e. to protect the conditions of competition between domestic and foreign services and service

suppliers.55 However, as is the case in the GATT 1994 case law, the rejection of the aim and

effects test should not be read as an outright rejection of all other factors than those taken into

account in GATS case law up to now. A wider interpretation of likeness than one based solely

on an analysis of competitive relationships needs to be considered as in the case of likeness of

services and service suppliers, such a restricted focus is of aggravated concern compared to

what is the case for goods. If no differentiation as to likeness can be made outside narrow

competitive relationships, than what is the added value of assessing the likeness of service

suppliers in GATS?

14. There would appear to be few situations in which like services are supplied by service

suppliers that are not in a competitive relationship. This may only be the case if the competitive

relationship between the service suppliers is examined in a very wide sense. The undesirable 53 Peter Van den Bossche and Werner Zdouc, The Law and Policy of the World Trade Organization (3rd edn, Cambridge University Press 2013) 394. 54 EC – Bananas III (AB) para. 241. The origin of the aim and effects test was United States – Measures Affecting Alcoholic and Malt Beverages DS23/R, GATT Panel report, adopted 19 June 1992, BISD 39S/206 and United States – Taxes on Automobiles DS31/R, GATT Panel report, 11 October 1994, unadopted, but the test was already dismissed in Japan – Taxes on Alcoholic Beverages WT/DS8/R, Panel report adopted 1 November 1996 paras. 6.16-6.17; a finding implicitly reaffirmed in Japan – Alcoholic Beverages II (AB) para. 115. It may be recalled that, in a famous contribution by Hudec, that author argues that when assessing likeness, panels are likely to, intuitively, covertly and in addition to the Border Tax Adjustment criteria, apply the aim and effects test. Moreover, adherence to ‘one-dimensional criteria’ to assess likeness may encourage covert decision-making. The rejection of the aims and effects test may ‘drive such considerations underground’, but does not eliminate them from the thinking of regulators. See Robert E Hudec, ‘GATT/WTO Constraints on National Regulation: Requiem for an "Aim and Effects" Test’ (1998) 32 The International Lawyer 619, 634-635 and 642; also see Aaditya Mattoo and Arvind Subramanian, ‘Regulatory Autonomy and Multilateral Disciplines: The Dillema and a Possible Resolution’ (1998) 1 Journal of International Economic Law 303; Amelia Porges and Joel P Trachtman, ‘Robert Hudec and Domestic Regulation: The Resurrection of Aim and Effects’ (2003) 37 Journal of World Trade 783. For an overview of doctrinal possibilities for including regulatory purpose in the likeness test, see Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 75-80 and 94-99 and the references there. 55 Cossy, Determining "Likeness" under the GATS: Squaring the Circle? 38.

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outcome of that approach is, however, that the services supplied by a company that engages in

sufficiently varied economic activities would be unlike one that is supplying one service, even if,

as concerns the actual supply of that service, the suppliers are identical. If a self-employed

consultant with x years of experience and y educational background, supplies consultancy

services, and a consultant working for a multi-national enterprise with the same experience and

background, supplies a like service, these suppliers can, in my view, not be considered not like.

Therefore, the current narrow interpretation can be said to not give meaning to all terms of the

covered agreements.56

15. In order to address this concern, and as the AB noted, case law from GATT 1994 may

inform the interpretation of likeness in the corresponding obligations under GATS.57 Looking at

this case law is useful as the likeness test under GATT 1994 has been the subject of more

interpretation. Although GATT 1994 case law on likeness equally focuses on the competitive

relationship between like products,58 the test appears more refined. In the case of the national

treatment obligation of Article III:4 GATT 1994, a “mere economic analysis of the cross-price

elasticity of demand” is insufficient, and “‘likeness’ is a matter of judgement – qualitatively as

well as quantitatively”.59 The well-known case law on likeness in Article III:4 GATT 1994 may be

summarised as taking into account:

“101. […] four categories of "characteristics" that the products involved might share:

(i) the physical properties of the products; (ii) the extent to which the products are

capable of serving the same or similar end-uses; (iii) the extent to which consumers

perceive and treat the products as alternative means of performing particular

functions in order to satisfy a particular want or demand; and (iv) the international

classification of the products for tariff purposes.

102. These general criteria, or groupings of potentially shared characteristics,

provide a framework for analyzing the "likeness" of particular products on a case-by-

56 United States – Standards for Reformulated and Conventional Gasoline WT/DS2/AB/R, AB report adopted 20 May 1996 21. 57 EC – Bananas III (AB) para. 231; China – Publications and Audiovisual Products (Panel) para. 7.975; China – Electronic Payment Services (Panel) para. 7.702. 58 See, for example, EC – Asbestos (AB) para. 99. Also see Van den Bossche and Zdouc, The Law and Policy of the World Trade Organization 327, where the authors note that it is ‘reasonable to expect’ that case law on likeness in Article III:4 GATS ‘will inform’ the interpretation of likeness under Article I GATT 1994. 59 Van den Bossche and Zdouc, The Law and Policy of the World Trade Organization 388.

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case basis. These criteria are, it is well to bear in mind, simply tools to assist in the

task of sorting and examining the relevant evidence”.60

Processes and production methods (PPMs) may influence the physical properties of the

product. If the PPM does not, it is a non-product-related processes and production method

(NPR-PPMs).61 Hence, the difference between PPMs and NPR-PPMs is that the latter “do not

affect the characteristics or properties of the products concerned”.62It should be noted that,

although not directly relevant as a criterion for the determination of likeness,63 NPR-PPMs may

increasingly play a role in consumer tastes and habits, therefore influencing likeness.64

16. In cases where the likeness of services and service suppliers requires more careful analysis

than in the GATS cases up to now, an application of these criteria to the context of trade in

services must be considered. Transposing these conditions to the likeness of services, or more

importantly, of service suppliers,65 leads me to the following conclusions.

60 EC – Asbestos (AB) paras. 101-102. These categories are based on the famous criteria noted in Border Tax Adjustments, (Report of the Working Party adopted on 2 December by the GATT Contracting Parties, 1970) para. 18, which reads in relevant part:

“The Working Party concluded that problems arising from the interpretation of the term should be examined on a case-by-case basis. This would allow a fair assessment in each case of the different elements that constitute a "similar" product. Some criteria were suggested for determining, on a case-by-case basis, whether a product is "similar": the product's end-uses in a given market; consumers' tastes and habits, which change from country to country; the product's properties, nature and quality”.

61 I equally use the term for ‘non-service-related’ processes and production methods. 62 Van den Bossche and Zdouc, The Law and Policy of the World Trade Organization 393. 63 United States – Restrictions on Imports of Tuna DS21/R, GATT Panel report, 3 September 1991, unadopted, BISD 39S/155 para. 5.15. 64 Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 345; Van den Bossche and Zdouc, The Law and Policy of the World Trade Organization 393. See Philippines – Taxes on Distilled Spirits WT/DS396/AB/R, WT/DS403/AB/R, AB report adopted 20 January 2012 para. 132, noting (on Article III:2 GATT 1994) that:

“While consumer perception of products is highly relevant to the overall determination of "likeness" under Article III:2, we believe that this element may reach beyond the products' properties, nature, and qualities, which concern the objective physical characteristics of the products. Indeed, consumer perception of products may be more concerned with consumers' tastes and habits than with physical characteristics”.

Note however that Article III:2 GATT 1994 requires both physical resemblance and a competitive relationship, whilst under Articles III:4 GATT 1994, II GATS and XVII GATS, there is no textual requirement of physical resemblance, albeit that it is one of the criteria relevant to likeness. Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 344. 65 As proposed by Rüdiger Wolfrum, ‘Article II GATS’ in Rüdiger Wolfrum, Peter-Tobias Stoll and Clemens Feinäugle (eds), Max Planck Commentaries on World Trade Law: WTO - Trade in Services, vol 6 (Martinus Nijhoff 2008) 83-85 and Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 265-268, and as noted by the parties in e.g. US – Gambling.

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17. First, as concerns the likeness of services, the existing analytical framework of a narrow

competitive basis appears warranted in the light of the GATT 1994 case law. The classification

of services can be examined on the basis of the W/120 or the CPC, which includes services.66

One applicable caveat is that the CPC is not based upon the competitive relationship of services

(or service suppliers) as it was designed for statistical purposes.67 The classification system

may also be insufficiently refined.68 Nonetheless, classification in the same sector may lead to a

presumption of likeness.69 Characteristics of the service (insofar as not ‘physical’, considering

the intangible nature of services),70 end uses,71 and consumer tastes and habits72 play a role

insofar as they influence the competitive relationship between the services. The method of

supply of a service may also be a crucial element to consider in the context of properties, nature

and quality of a service, and this may also influence consumer tastes and habits.73 The issue of

methods of supply is further elaborated on below. In summary, for services, I adhere to a notion

of ‘competitive likeness’ or ‘market likeness’.74

66 See EC – Bananas III (Panel) para. 7.322. Mattoo, ‘National Treatment in the GATS: Corner-Stone or Pandora's Box?’ 128 argues that

“in so far as the services classification was developed and used for negotiating commitments on both market access and national treatment, it could be argued that it represents mutually accepted product distinctions for regulatory purposes”.

67 Wolfrum, ‘Article II GATS’ 83. 68 Mattoo, ‘National Treatment in the GATS: Corner-Stone or Pandora's Box?’ 128. 69 EC – Bananas III (Panel) paras. 7.287-7.293; Mattoo, ‘National Treatment in the GATS: Corner-Stone or Pandora's Box?’ 128; Krajewski, National Regulation and Trade Liberalization in Services 101-102; Poretti, The Regulation of Subsidies Within the General Agreement on Trade in Services of the WTO: Problems and Prospects 131. 70 I do not follow the strict approach to ‘physical’ characteristics adopted by e.g. Poretti, The Regulation of Subsidies Within the General Agreement on Trade in Services of the WTO: Problems and Prospects 130, noting that this criterion is voided because of the non-physical nature of a service. Rather, I agree with the ‘intrinsic’ characteristics approach favoured by Cossy, Determining "Likeness" under the GATS: Squaring the Circle? 335-336. 71 Mattoo, ‘National Treatment in the GATS: Corner-Stone or Pandora's Box?’ 128; Zdouc, ‘WTO Dispute Settlement Practice Relating to the General Agreement on Trade in Services’ 395; Cossy, Determining "Likeness" under the GATS: Squaring the Circle? 21. 72 Krajewski, National Regulation and Trade Liberalization in Services 99; Cossy, Determining "Likeness" under the GATS: Squaring the Circle? 21; Markus Krajewski and Maika Engelke, ‘Article XVII GATS’ in Rüdiger Wolfrum, Peter-Tobias Stoll and Clemens Feinäugle (eds), Max Planck Commentaries on World Trade Law: WTO - Trade in Services, vol 6 (Martinus Nijhoff 2008) 403; Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 262-264. It is true, as noted by Zdouc, ‘WTO Dispute Settlement Practice Relating to the General Agreement on Trade in Services’ 395-396 that this criterion would have less impact where the service does not require close interaction between the consumer and the service supplier. 73 Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 252 252. 74 These terms are used by Porges and Trachtman, ‘Robert Hudec and Domestic Regulation: The Resurrection of Aim and Effects’ 785.

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18. Second, for the likeness of service suppliers, the use of the aforementioned criteria

becomes more problematic. The use of classification instruments has been criticised,75 as this

leads to the approach in e.g. EC – Bananas III that the likeness of services implies that of the

suppliers. Focusing too strictly on the characteristics of the service supplier in general, such as

their activities, equipment, types of personnel employed and marketing stages,76 may lead to a

situation where “the existence of like suppliers would become a theoretical construct which

could hardly be found in the real world”.77 End uses would appear less relevant for assessing

the likeness of the service supplier.

19. Therefore, it has been argued that consumers tastes and habits should play a key role in the

establishment of likeness of service suppliers,78 as a consumer-oriented approach of

determining the competitive relationship of services and service suppliers requires taking into

account many factors besides the aforementioned three. These factors include evidence which

has been taken into account in past case law, such as marketing studies, price differences,

distribution channels, sales points, statements by national authorities, evidence from third

markets and health risks.79 However, the problem with overemphasising consumer tastes and

habits is that consumers are to bear a vast responsibility,80 which is perhaps too heavy a

burden. The result of such a burden would moreover be that (governmental) information

campaigns, whether their basis is correct or not, and influence consumers’ tastes and habits

may lead to different outcomes regarding likeness. This issue is much more real in the case of

services than in goods, considering the vast information asymmetries on, for example, the

quality of services and service suppliers.81 It must also be recalled that consumer tastes and

habits are but one of the relevant elements that need to be taken into account when assessing

likeness. Therefore, although the proposal has some clear moral benefits, it seems unlikely to

me that, as has been suggested, a panel would accept that services or service suppliers are not 75 Cossy, Determining "Likeness" under the GATS: Squaring the Circle? 17. 76 As argued by the U.S. in EC – Bananas III (Panel) para. 4.667. 77 Zdouc, ‘WTO Dispute Settlement Practice Relating to the GATS’ 333 (emphasis original). 78 Krajewski, National Regulation and Trade Liberalization in Services 99; Cossy, Determining "Likeness" under the GATS: Squaring the Circle? 21, who notes end use and, although to a lesser extent, consumer tastes and habits are most relevant; Krajewski and Engelke, ‘Article XVII GATS’ 403; Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 262-264. 79 Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 264. 80 Similarly, see De Meester, ‘Testing European Prudential Conditions for Banking Mergers in the Light of Most Favoured Nation in the GATS’ 630. 81 Pierre Sauvé and Robert M Stern, ‘New Directions in Services Trade Liberalization: An Overview’ in Pierre Sauvé and Robert M Stern (eds), GATS 2000: New Directions in Services Trade Liberalization (Brookings Institution 2000) 15.

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like because one construction service is provided through child labour and the other by an

adult.82 In a particular context, a panel may find that these services or service suppliers are not

like, but would perhaps do so because of other reasons:

“if tastes and perceptions bear directly on the service, the characteristics and

qualities of the suppliers are likely to be an important element in shaping these

tastes and perceptions. For example, the particular qualifications of certain suppliers

may make them like or unlike from a consumer's point of view”.83

This approach links consumer tastes and habits to characteristics and qualities of the service

supplier. I would add that these characteristics and qualities need to be related to the supply of

the service. Coming back to the consultancy services example, the relevant characteristics and

qualities are those that influence the service, not those of the supplier in general. This mitigates

the concern raised by the U.S.’ argument in EC – Bananas III.

20. This combination of consumer tastes and habits, and the characteristics of the service

supplier insofar as relevant to the supply of the service appear most suited to assess the

likeness of the service suppliers. In both criteria, NPR-PPMs have a place. It has been noted

that the role of NPR-PPMs in determining likeness of services is limited, considering that

services are often produced and consumed at the same time,84 but it has equally been stated

that their role is more important because the likeness of the service suppliers requires

assessing some process methods.85 The issue is crucial for regulatory autonomy, as a

“true PPM-measure pursues primarily policy goals unrelated to trade. Most of the

time, the measure is aimed at subjects such as labour standards, human rights,

environmental protection or animal welfare”.86

In many cases, such measures are likely to be NPR-PPMs. In the context of GATS, the issue is

perhaps less contentious as trade in services entails less extraterritorial effects: whilst process

and production of a service supplied through Modes 1 and 2 may still be foreign, in the case of

Modes 3 and 4 they occur on the territory of the importing Member.87 Therefore, the regulation

82 Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 347 347. 83 Cossy, Determining "Likeness" under the GATS: Squaring the Circle? 22. 84 Krajewski and Engelke, ‘Article XVII GATS’ 406. 85 Wolfrum, ‘Article II GATS’ 84. 86 Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 339. 87 Nicolaïdis and Trachtman, ‘From Policed Regulation to Managed Recognition in GATS’ 253; Joel P Trachtman, ‘Lessons for the GATS from Existing WTO Rules on Domestic Regulation’ in Aaditya Mattoo and Pierre Sauvé (eds), Domestic Regulation & Service Trade Liberalization (World Bank & Oxford University Press 2003) 76; Nicolas Diebold, ‘The Morals and Order Exceptions in WTO Law: Balancing the Toothless Tiger and the Undermining Mole’

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of the service can be subjected to domestic regulatory measures. Consequently, PPMs seem to

play an important role in the determination of the likeness of the service supplier (as the relative

importance of the characteristics of the service supplier is larger than with goods),88 whilst NPR-

PPMs may be more relevant than under GATT 1994 case law, considering the more limited

concerns on extraterritoriality and the requirement of addressing the likeness of the service

supplier. The latter is determined by consumer tastes and habits and the characteristics of the

service supplier, both of which (but especially the former) may be influenced by taking into

account NPR-PPMs.

21. Thus, for the likeness of service suppliers, I argue in favour of indirectly taking into account

some aspects of ‘regulatory likeness’ or ‘policy likeness’,89 in addition to the more narrow

‘competitive likeness’ or ‘market likeness’.90 This may differ from the competitive likeness that

dominates GATT 1994 case law, but this difference may be smaller than expected, considering

the case law on likeness in Article 2.1 TBT Agreement, where the AB noted that “the regulatory

concerns that underlie a measure may be considered to the extent that they have an impact on

the competitive relationship”.91 Nonetheless, for service suppliers, the role of regulatory concern

(2008) 11 Journal of International Economic Law 43, 70; Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 345. 88 Pauwelyn, ‘The Unbearable Lightness of Likeness’ 359. 89 This differs from the approach rejected by the AB in US – Clove Cigarettes (AB) paras. 112-116. The AB noted that likeness based on regulatory distinctions is difficult to achieve because this requires an identification of all relevant objectives of a measure and an assessment of which objectives should prevail. Such an identification would not always be possible to make, for a panel or a complainant. Moreover, the AB noted that

“distinctions among products that have been found to be like are better drawn when considering, subsequently, whether less favourable treatment has been accorded, rather than in determining likeness, because the latter approach would alter the scope and result of the less favourable treatment comparison”.

The indirect approach advocated here is more like the AB’s finding in EC – Asbestos. As the AB noted in paras. 117-119 of US – Clove Cigarettes,

“in concluding that the determination of likeness should not be based on the regulatory purposes of technical regulations, we are not suggesting that the regulatory concerns underlying technical regulations may not play a role in the determination of whether or not products are like. In this respect, we recall that, in EC – Asbestos, the Appellate Body found that regulatory concerns and considerations may play a role in applying certain of the "likeness" criteria (that is, physical characteristics and consumer preferences) and, thus, in the determination of likeness under Article III:4 of the GATT 1994”.

90 These terms are used by, for example, Porges and Trachtman, ‘Robert Hudec and Domestic Regulation: The Resurrection of Aim and Effects’ 785 and Petros C Mavroidis, ‘Driftin’ too Far from Shore – Why the Test for Compliance with the TBT Agreement Developed by the WTO Appellate Body is Wrong, and What Should the AB Have Done Instead’ (2013) 12 World Trade Review 509. 91 US – Clove Cigarettes (AB) paras. 136 and 156 and 156. In para. 120, the AB explains that the likeness analysis under Article III:4 GATT 1994 is relevant to that in Article 2.1 TBT Agreement. As with the analysis of less favourable treatment, this appears to apply vice versa as well.

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would be larger than for services. Such a difference is justified. First, the text of Articles II and

XVII GATS requires assessing the likeness of the services and of the service suppliers. A

narrow interpretation of competitive likeness cannot give sufficient weight to the likeness of

service suppliers. Second, a wide interpretation of competitive likeness, as proposed by the

U.S. in EC – Bananas III would lead to unsatisfactory results, too. Therefore, the likeness of

service suppliers should be assessed on the basis of the characteristics of the service supplier

insofar as relevant to the supply of the service, and on the basis of consumer tastes and habits.

For both criteria, PPMs and NPR-PPMs inevitably play a role. The regulation of the service

supplier thereby comes within the ambit of the likeness analysis: the competitive likeness is

supplemented by some aspects of regulatory likeness.

2.4 Likeness across modes of supply or methods of supply?

22. A final aspect of likeness that needs to be mentioned is the influence of modes of supply on

likeness. The issue was already raised in 1996 by the Secretariat, noting that:

“The text of Article XVII does not suggest that the mode of supply is a consideration

in defining “likeness” of a service: different modes of supply could be used to

provide a “like” service. The structure of the schedules, however, implies that a

Member's commitments are mode-specific, i.e. a Member making a commitment to

provide national treatment, does so within a specific mode but is allowed to

discriminate between the same service supplied by different modes”.92

Subsequently, the Panel in Canada – Autos stated that for the purposes of the case, “services

supplied in Canada through modes 3 and 4 and those supplied from the territory of other

Members through modes 1 and 2 are "like" services”.93 In US – Gambling, this matter was

extensively addressed by the parties: Antigua and Barbuda essentially claimed that remote

gambling services are like land-based gambling services, the U.S. opposed this view.94 These

arguments were left unaddressed by the Panel, which exercised judicial economy as to Article

XVII GATS. Nonetheless, it seems that the Panel in Canada – Autos has, for now, established

the idea that modes of supply do not in se play a role in determining likeness.

92 S/WPGR/9, Subsidies and Trade in Services (Note by the Secretariat 6 March 1996) para. 28. 93 Canada – Autos (Panel) para. 10.307. The AB did not address the finding. 94 United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services WT/DS285/R, Panel report adopted 20 April 2005 paras. 3.148-3.220.

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23. As also noted by the Secretariat, accepting such likeness across modes may raise the

question of the value of modal commitments.95 It has been argued that the result of accepting

likeness across methods of supply may limit real-life regulatory needs:

“services supplied through the Internet for instance, whether cross-border or within

the same territory, would have to be subject to the same regulation as services

provided by commercial establishment or physical persons having a direct contact

with the consumer (“face to face”)”.96

24. If one takes a step back, the issue may not be as pressing as it may seem. In the case of

national treatment, the relevant comparison for likeness is between domestic and foreign

service suppliers. The former do not fall within the definitions of modes of supply in GATS.

Thus, in the context of national treatment, likeness across modes is as a concept perhaps rather

irrelevant, as it could never serve to illustrate likeness between foreign and domestic services

and service suppliers.97 In the context of the Most-Favoured-Nation (MFN) obligation, this is

different,98 as indicated by the Panel’s reasoning in Canada – Autos. However, in such cases,

the relevance of the mode of supply in se is still not necessarily relevant, and the concept

‘method of supply’ may appear more appealing. The method of supply of a service is for

example face-to-face or through the internet.99 This of course relates to the mode of supply, but

is a more useful proxy to assess an impact on likeness as the mode of supply is not necessarily

the same as the potentially more detailed characterisation of method of supply.100 It may equally

play a role in determining likeness under the national treatment obligation, as a domestic

service is supplied through a method of supply.

95 Krajewski and Engelke, ‘Article XVII GATS’ 405. 96 Cossy, Determining "Likeness" under the GATS: Squaring the Circle? 14. 97 Ibid 14-15. 98 Wolfrum, ‘Article II GATS’ 84. 99 Cossy, Determining "Likeness" under the GATS: Squaring the Circle? 15; Krajewski and Engelke, ‘Article XVII GATS’ 405. See a similar distinction between ‘modes of supply’ and ‘means of supply’ in US – Gambling (Panel) paras. 6.362-6.363, 6.368-6.370 and 6.376-6.378. In para. 6.285, the Panel noted that “mode 1 under the GATS encompasses all possible means of supplying services from the territory of one WTO Member into the territory of another WTO Member”. 100 I therefore do not agree that “In the end, the mode of supply should be one factor, among others, to be taken into account when determining whether services and service suppliers are ‘like’”, as noted by Eric Leroux, ‘Eleven Years of GATS Case Law: What Have We Learned?’ (2007) 10 Journal of International Economic Law 749, 780 and the similar consideration in Wolfrum, ‘Article II GATS’ 84, who suggests a two-step approach of first establishing whether, in the MFN context, services are supplied through the same mode and then assessing the exchangeability of the services.

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25. Therefore, I concur with the approach that the crux is whether the method of supply “should,

as such, play a role in the determination of likeness”.101 The mode of supply is in se not

relevant. The method of supply, in my view, is:102 the end use of services supplied through

different methods of supply may differ, the classification of the service could differ, the

characteristics of service and service supplier may, too, and so can consumer tastes and habits

of both service and service supplier. (Note that the method of supply has been said to be

comparable to the method of production.103) Generally speaking, there may not be a full

competitive relationship between services supplied through different methods of supply.104 This

does not entail unexpected liberalisation, or an overstretching of the obligation,105 as the

Schedules still limit the scope of the national treatment obligation:106 only insofar as

commitments have been made and no conditions have been scheduled, can the national

treatment apply. Taking into account the method of supply in assessing likeness does not alter

this.

26. This interpretation alleviates the two issues raised with respect to modality and likeness.

The first asks “whether Members can explicitly retain the right to discriminate between

modes”.107 The example enquires into the value of commitments if a Member may, for example,

grant a subsidy to a national service supplier only after according full Mode 1 market access

and national treatment, as this measure would modify the conditions of competition vis-à-vis the

foreign service suppliers.108 If the method of supply is the relevant proxy, it may be said that this

could constitute a national treatment violation insofar as the domestic and foreign service

supplier are like, taking into account inter alia the difference between the service supplied

through Mode 1 and by a domestic service supplier. If both provide the service through, for 101 Cossy, Determining "Likeness" under the GATS: Squaring the Circle? 14 15. 102 A very early reference to the potential relevance of method of supply in determining likeness can be found in Aly K Abu-Akeel, ‘The MFN as it Applies to Service Trade: New Problems for an Old Concept’ (1999) 33 Journal of World Trade 103, 115. 103 Diebold, ‘The Morals and Order Exceptions in WTO Law: Balancing the Toothless Tiger and the Undermining Mole’ 70. 104 Krajewski and Engelke, ‘Article XVII GATS’ 405-406. 105 Zdouc, ‘WTO Dispute Settlement Practice Relating to the General Agreement on Trade in Services’ 402. 106 For example, if a Member limits market access in accordance with the type of legal entity of the foreign service supplier through a limitation on Article XVI:2 (e) GATS, it may still prohibit service supply through a subsidiary and a branch, thereby influencing the likeness analysis and thus the scope of the national treatment obligation. Mattoo, ‘National Treatment in the GATS: Corner-Stone or Pandora's Box?’ 133. 107 Ibid. 108 Patrick Low and Aaditya Mattoo, ‘Is There a Better Way? Alternative Approaches to Liberalization Under the GATS’ in Pierre Sauvé and Robert M Stern (eds), GATS 2000: New Directions in Services Trade Liberalization (Brookings Institution 2000) 453.

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example, telephone communication, the services may well be like and the measure could

violate the national treatment obligation if it modifies the conditions of competition to the

detriment of the foreign service supplier.

27. The second, related, issue that was raised, is “whether Members who have made a full non-

discriminatory commitment, can, nevertheless, apply different standards of treatment to different

modes.”109 This issue thus arises in the case that a Member makes full commitments on

national treatment in several Modes of supply, and “The question is whether nominally identical

commitments translate into effective equality of treatment.”110 The example given by these

authors concerns a subsidy granted to domestic services. Foreign service suppliers under

Modes 3 and 4 could claim that the subsidy is extended to them, which would also affect

services supplied through Modes 1 and 2. The question is whether these service suppliers could

also claim access to the subsidy.111 Applying the above interpretation once more, the likeness of

the services, taking into account the method of supply, would seem to lead to an acceptable

outcome.

3. Less favourable treatment112

28. Aside from the requirement of having like services and service suppliers, the text of Article

XVII GATS requires that treatment granted to like foreign services or service suppliers should

be no less favourable than that accorded to domestic services and service suppliers.113 Article

XVII GATS states, in relevant part:

“1. […] each Member shall accord to services and service suppliers of any other

Member, in respect of all measures affecting the supply of services, treatment no

less favourable than that it accords to its own like services and service suppliers.10

2. A Member may meet the requirement of paragraph 1 by according to services

and service suppliers of any other Member, either formally identical treatment or

109 Mattoo, ‘National Treatment in the GATS: Corner-Stone or Pandora's Box?’ 119. 110 Ibid 120. 111 Ibid. 112 This section draws from Bregt Natens and Dylan Geraets, ‘Modification of the Conditions of Competition for Goods and Services: The Side-track that Never Was’ (forthcoming) 12 Manchester Journal of International Economic Law. I am thus indebted to my co-author for the views expressed in this section. 113 In EC – Bananas III (Panel) para. 6.94, the likeness and less favourable treatment conditions were explicitly set out to find as conditions to establish a violation of the MFN obligation.

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formally different treatment to that it accords to its own like services and service

suppliers.

3. Formally identical or formally different treatment shall be considered to be less

favourable if it modifies the conditions of competition in favour of services or service

suppliers of the Member compared to like services or service suppliers of any other

Member. 10 Specific commitments assumed under this Article shall not be construed to require any

Member to compensate for any inherent competitive disadvantages which result from the

foreign character of the relevant services or service suppliers”.

The Panel in EC – Bananas III noted that paragraphs 2 and 3 of Article XVII GATS clarify and

reinforce the less favourable treatment standard.114 This merely “serve[s] the purpose of

codifying” the interpretation of less favourable treatment as requiring the provision of no less

favourable conditions of competition regardless of whether that is achieved through the

application of formally identical or formally different measures, and the second and third

paragraph “do not impose new obligations on Members additional to those contained in

paragraph 1”.115 The AB, however, nuanced this position, stating that interpretations of less

favourable treatment under Article XVII GATS or Article III GATT 1994, i.e. the national

treatment obligations, are “not necessarily relevant to the interpretation” of the same term in the

context of the MFN obligation of Article II GATS.116 This view may be supported considering the

different objectives of an MFN obligation (non-discrimination between services or service

suppliers of third Members) and a national treatment obligation (non-discrimination between

domestic and foreign services or service suppliers).117 However, the textual differences do not

mean that the less favourable treatment condition must be interpreted differently.118 In essence,

the less favourable treatment aspect of both obligations is breached when a measure creates

114 Ibid para. 7.301. 115 Ibid. Also see Zdouc, ‘WTO Dispute Settlement Practice Relating to the General Agreement on Trade in Services’ 404-405 with references to the GATT Panels that served as inspiration, i.e. Italian Discrimination Against Imported Agricultural Machinery L/833, GATT Panel report, adopted 23 October 1958, BISD 7S/60 para. 12 (from which Article XVII:3 GATS was derived); United States Section 337 of the Tariff Act of 1930 L/6439, GATT Panel report, adopted 7 November 1989, BISD 36S/345 para. 5.11 (which served as inspiration for Article XVII:2 GATS). 116 EC – Bananas III (AB) para. 231. This finding is referred to in European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs WT/DS174/R, Panel Report adopted 20 April 2005 footnote 198 and US – Tuna II (Mexico) (Panel) para. 7.271. 117 Wolfrum, ‘Article II GATS’ 88. 118 Zdouc, ‘WTO Dispute Settlement Practice Relating to the General Agreement on Trade in Services’ 415, interpreting EC – Bananas III (AB) para. 233.

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less favourable conditions of competition.119 This is unsurprising considering the importance of

this concept to GATT 1994 case law on less favourable treatment, and the explicit link in case

law on Article XVII GATS to the national treatment obligation in Article III:4 GATT 1994. In my

view, the interpretation of Articles III:4 GATT and XVII GATS, and Article II GATS as well,120

coincide as concerns the less favourable treatment condition.

29. One notable point of difference between goods and services, as also noted above

concerning likeness, is the relationship between the less favourable treatment of the services

and that of the service suppliers. It would seem that they often coincide, however in case they

do not the question rises whether it is sufficient that there is a modification of the like foreign

service supplier’s conditions of competition even if this not the case for the like service, or vice

versa. The use of the word ‘or’ in Article XVII:3 indicates an affirmative answer, insofar as both

services and service suppliers are like. Consequentially, subject to the approach taken under

the likeness condition, the scope of the less favourable treatment condition in Article XVII GATS

may be wider than is the case for trade in goods.121

3.1 A modification of the conditions of competition

30. GATS case law interpreted the less favourable treatment criterion as essentially assessing

whether the measure modifies the conditions of competition. The centrality of ‘modification of

the conditions of competition’ to the less favourable treatment condition is apparent from the

GATT 1947-era Panel report on US – Section 337 onwards, with the Panel noting that the less

favourable treatment condition “calls for effective equality of opportunities for imported

products”.122 The impact of the measure on the equality of competitive conditions “are, first and

foremost, those that are discernible from the design, structure, and expected operation of the

measure”.123 In summary, as Geraets and I have said elsewhere,

119 EC – Bananas III (Panel) para. 7.301. This is also the case for the national treatment obligation under the GATT 1994. 120 Zdouc, ‘WTO Dispute Settlement Practice Relating to the General Agreement on Trade in Services’ 416, noting that it “would be inappropriate to conceive of a degree of de facto discrimination that is prohibited under Article XVII, but not in violation of Article II of GATS”. 121 Ibid. 122 US – Section 337 Tariff Act (GATT Panel) para. 5.11. 123 Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines WT/DS371/AB/R, AB report adopted 15 July 2011 para. 130. Also see Canada – Certain Measures Concerning Periodicals WT/DS31/AB/R, AB report adopted 30 July 1997 para. 30, where the AB noted that the design and structure of a measure may indicate a protectionist intent and the causing of less favourable treatment.

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“conditions of competition are the overall framework of governmental measures

(laws, regulations and requirements) that impact the internal sale, offering for sale,

purchase, transportation, distribution or use of goods or services. A [modification of

the conditions of competition] then occurs when a measure causes a change in the

overall framework of governmental measures and that change results in an

alteration in the competitive opportunities between foreign and domestic products or

services”.124

31. In the context of GATS, the Panel in China – Electronic Payment Services stated that,

provided that all other conditions of Article XVII GATS are fulfilled, there is less favourable

treatment “if and only if such treatment modifies the conditions of competition to their

detriment”.125 Thus, at least according to this Panel, the scope of less favourable treatment in

Article XVII GATS does not extend beyond a modification of the conditions of competition, which

is a necessary condition for the establishment of less favourable treatment. It would equally

appear to be a sufficient condition. In EC – Seal Products, the AB rejected “the proposition that

the detrimental impact of a measure on competitive opportunities for like imported products is

not dispositive for the purposes of establishing a violation of Article III:4”.126 On the contrary, I

have argued elsewhere that as soon as a governmental measure results in a modification of the

conditions of competition that has a detrimental impact on imported (products or) services, the

measure accords less favourable treatment. The sole exception hereto is the case where there

is no ‘genuine relationship’ between the measure and the adverse impact.127 This requirement

has been part of the GATT 1994 case law since US – Gasoline, where the Panel clarified that

the relevant conditions of competition are those “established by government measures and

would not therefore include factors such as the “flexibility of individual producers” in this

124 Natens and Geraets, ‘Modification of the Conditions of Competition for Goods and Services: The Side-track that Never Was’, at the end of section 1. 125 China – Electronic Payment Services (Panel) para. 7.687. 126 European Communities – Measures Prohibiting the Importation and Marketing of Seal Products WT/DS400/AB/R, AB report adopted 18 June 2014 para. 5.110 para. 5.110. 127 See United States – Certain Country of Origin Labelling (COOL) Requirements WT/DS384/AB/R, WT/DS386/AB/R, AB report adopted 23 July 2012 para. 270 (footnotes omitted), where the AB notes that

“for a measure to be found to modify the conditions of competition in the relevant market to the detriment of imported products, there must be a “genuine relationship” between the measure at issue and the adverse impact on competitive opportunities for imported products. In each case, the relevant question is whether it is the governmental measure at issue that “affects the conditions under which like goods, domestic and imported, compete in the market within a Member's territory”.

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case”.128 Indeed, footnote 10 to Article XVII GATS equally reflects this requirement: if the

conditions of competition are modified because of inherent competitive disadvantages of the

foreign service provided, there is no less favourable treatment. There thus appears to be no

room for regulatory motives or considerations in assessing the less favourable treatment

condition in the national treatment obligation in GATS. This is in line with the AB’s rejection of

the aims and effects test, which also applies vis-à-vis the assessment of whether a measure

modifies the conditions of competition.129 Finally, it may be recalled that some authors have

criticised the AB’s approach in EC – Seal Products, or have put forth a different interpretation of

its finding discussed above.130 A recent compliance Panel in US – COOL nonetheless followed

the AB’s approach, rejecting the U.S.’ argument that a detrimental impact on competitive

conditions is insufficient for establishing less favourable treatment, and consequently stating

that there is no room for an assessment of legitimate regulatory distinctions in the context of

Article III:4 GATT 1994.131

32. A close examination of the case law on less favourable treatment in GATS clarifies the

manner in which the less favourable treatment condition is being shaped in the context of

services. (In support of the argument—which is not made here but is part of the doctoral

dissertation—that less favourable treatment in the MFN and national treatment obligations

needs to be interpreted consistently, this survey also highlights that panels do not appear to put

128 United States – Standards for Reformulated and Conventional Gasoline WT/DS2/R, Panel report adopted 20 May 1996 para. 6.25. Geraets and I argue that the AB’s finding in Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes WT/DS302/AB/R, AB report adopted 19 May 2005 para. 96 that a detrimental impact does not automatically indicate less favourable treatment “if the detrimental effect is explained by factors or circumstances unrelated to the foreign origin of the product, such as the market share of the importer in this case” is merely another restatement of the ‘genuine relationship’ requirement. Similarly, one can argue that the Panel’s statement in European Communities – Measures Affecting the Approval and Marketing of Biotech Products WT/DS293/R, Panel report adopted 21 November 2006 para. 7.2514 may be read in the same way:

“it is not self-evident that the alleged less favourable treatment of imported biotech products is explained by the foreign origin of these products rather than, for instance, a perceived difference between biotech products and non-biotech products in terms of their safety, etc”.

129 EC – Bananas III (AB) para. 243. 130 See the discussions between distinguished trade law experts such as Lorand Bartels, Sungjoon Cho, Michael Ming Du, Robert Howse, Simon Lester, Joost Pauwelyn and Joel Trachtman, on the International Economic Law and Policy Blog: http://worldtradelaw.typepad.com/ielpblog/2014/03/seal-products-and-the-scope-of-gatt-article-iii4.html; http://worldtradelaw.typepad.com/ielpblog/2014/05/the-wto-appellate-body-ruling-in-seals-national-treatment-article-iii4.html; and http://worldtradelaw.typepad.com/ielpblog/2014/05/lets-put-the-abs-new-article-iii4-test-to-the-test.html (last accessed 12 November 2014). 131 United States – Certain Country of Origin Labelling (COOL) Requirements (Recourse to Article 21.5 of the DSU by Canada and Mexico) WT/DS384/RW, WT/DS386/RW, Panel report circulated 20 October 2014, not yet adopted paras. 7.621 and 7.625

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a particular emphasis on paragraphs 2 and 3 of Article XVII GATS.) At the outset, it may be

noted that Article XVII:2 GATS has been interpreted as explicitly including de facto

discrimination, aside from de jure discrimination, in the national treatment obligation.132 This

equally applies to the MFN obligation, as deciding otherwise would made it “not difficult” to

“devise discriminatory measures aimed at circumventing the basic purpose” of Article II

GATS.133 Hence, de facto discriminatory measures may equally not lead to a modification of the

conditions of competition to the detriment of either foreign services and service suppliers, or the

services or service suppliers of any other country. Note however that a close reading of Article

XVII GATS also indicates that a Member may comply with the national treatment obligation

through granting both different and identical treatment.134 Formally different treatment may thus

explicitly differentiate on the basis of origin, as long as this does not constitute a

discrimination.135

33. In EC – Bananas III, the Panel and the AB considered as license transferees were “most

often” foreign service suppliers and license sellers were “usually” domestic service suppliers,

foreign service suppliers were “subject to less favourable conditions of competition in their ability

to compete in the [relevant] services market”.136 It may be noted that the EU, at the introduction

of licensing system which was under scrutiny, had stated that the purpose of the measure was

the cross-subsidisation of Category B service suppliers.137 This analysis was not countered by

factual evidence, which pointed at a lack of significant change in market share.138 A similar

situation was addressed in Canada – Autos, where the origin-neutral measure provided an

incentive for manufacturers to purchase domestic services, thus modifying the conditions of

competition.139 These findings indicate that for an assessment of the detrimental impact of the

measure, it suffices that foreign services and service providers are ‘usually’ disfavoured.

34. Furthermore, in Canada – Autos, the AB noted that, where a measure directly regulates

goods, a panel must analyse the detrimental impact of a measure on the service suppliers in 132 S/L/92 2001 Scheduling Guidelines para. 13. 133 EC – Bananas III (AB) para. 234; Canada – Autos (AB) para. 141. 134 China – Publications and Audiovisual Products (Panel) para. 7.1130. 135 Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef WT/DS161/AB/R, AB report adopted 10 January 2001 para. 144; Flett, ‘WTO Space for National Regulation: Requiem for a Diagonal Vector Test’ 54-55. 136 EC – Bananas III (Panel) para. 7.336. 137 Ibid para. 7.352. 138 Ibid para. 7.337. Concerning related measures, the Panel confirms this finding in paras. 7.363-7.366, 7.378-7.379 and 7.392 and confirmed by EC – Bananas III (AB) paras. 244, 246 and 248. 139 Canada – Autos (Panel) para. 10.307. This finding was not appealed.

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their capacity as service supplier even if the service supplier is, in a different capacity, also

experiencing the detrimental impact as a manufacturer of goods. 140 This finding seems to have

limited the scope of findings of de facto discrimination under the national treatment obligation,141

or at the least clarified the overlap between Articles III:4 GATT 1994 and XVII GATS in

situations where the measure affects goods and services.

35. The Panel in China – Publications and Audiovisual Products was faced with de jure

discriminatory measures. It noted that, considering that the measure excluded foreign service

suppliers at hand, the conditions of competition were modified “in the most radical way”, i.e. by

eliminating all foreign competition, depriving foreign service suppliers of any opportunity to

compete.142 Regarding another measure, according to which foreign service suppliers are

subjected to a maximum 30 year operating term whilst domestic service suppliers are not, the

Panel held explicitly that GATT 1994 case law on less favourable treatment in national

treatment was relevant considering that both obligations require “an analysis of the effects of a

measure on conditions of competition”.143 Consequently, the Panel argued, LFT must be

assessed through “careful analysis of the measure and the market”, the main concern being

whether the measure “unfavourably modifies “conditions of competition” to the detriment” of

foreign service suppliers.144 The Panel then applied this test, finding that, first, the measure

“could impose significant costs” on the foreign service supplier. Second, even though the costs

and the risk of service interruptions are only likely to materialise towards the end of the 30 year

operating term, this could potentially affect conditions of competition, especially for those

service suppliers looking to provide the services for a period longer than 30 years.145 The Panel

concluded that the discriminatory measure has “implications in the marketplace” and as there is

no limitation scheduled in this regard, the measure violated Article XVII GATS.146

140 Canada – Autos (AB) para. 181. 141 Zdouc, ‘WTO Dispute Settlement Practice Relating to the General Agreement on Trade in Services’ 410, emphasis omitted. 142 China – Publications and Audiovisual Products (Panel) para. 7.979. Regarding other measures at issue with similar de jure discriminations, the Panel reiterates its finding in paras. 7.996, 7.1073, 7.1094, 7.1421. The parties did not contest that a different measure under scrutiny, which required higher capital requirements for the establishment of foreign firms, had “an impact on the conditions of competition” at paras. 7.1114-7.1118. 143 Ibid paras. 7.1131-7.1132. 144 Ibid paras. 7.1131, citing United States – Tax Treatment for “Foreign Sales Corporations” (Recourse to Article 21.5 of the DSU by the EC) WT/DS108/AB/RW, AB report adopted 20 March 2000 paras. 215 and 221, and 7.1136. 145 China – Publications and Audiovisual Products (Panel) paras. 7.1136-7.1138. 146 Ibid para. 7.1139. The Panel reiterates this finding as concerns a similar measure in para. 7.1425.

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Similarly, in China – Electronic Payment Services, the Panel found that the measures under

scrutiny resulted in formally different treatment between domestic and foreign service

suppliers.147 This Panel found inter alia that there was a modification of the conditions of

competition on the basis that payment cards, in certain circumstances, must prominently feature

the domestic electronic payment service provider’s logo for free. This raises the profile of that

domestic service supplier and modifies the conditions of competition.148 Similarly, one-way only

interoperability requirements modify the conditions of competition in favour of domestic service

suppliers. Foreign service suppliers would need to incur time and cost to remedy this.149 Other

related measures indicated a modification of the conditions of competition because foreign

services could be denied by merchants and acquirers while the like domestic service could

not.150

36. The findings in both Chinese cases stress that a formally different, i.e. a de jure

discriminatory, measure will modify the conditions of competition even if the detrimental impact

is both in the far future and uncertain. Foreign services or service suppliers may thus not be

subjected to treatment that could, in the future increase costs or risks, or could induce consumer

disfavour. Hence, a potential disparate impact suffices to establish less favourable treatment.

Although there is no reason to second-guess the Panels’ conclusions in both cases, this

interpretation of a modification of the conditions of competition does seem to leave very little

room for domestic regulators to grant treatment no less favourable through formally different

treatment.151

3.2 The disparate impact test as the standard of less favourable treatment

37. A modification of the conditions of competition is instructive for a finding of less favourable

treatment. A detrimental impact on foreign services and service suppliers in comparison to like

domestic services and service suppliers leads to a finding that there is such a modification.

There is a clear tendency to do so by applying the ‘disparate impact test’ or asymmetric impact

147 China – Electronic Payment Services (Panel) paras. 7.694 and 7.720. 148 Ibid para. 7.712. 149 Ibid paras. 7.714 and 7.738. 150 Ibid paras. 7.725 and 7.736. 151 Note that the link between formally different treatment and de jure discrimination has been contested in Flett, ‘National Treatment under the General Agreement on Trade in Services (GATS)’ 75, although it is made in EC – Bananas III (Panel) paras. 7.298, upheld by the EC – Bananas III (AB) paras. 240; S/L/92 2001 Scheduling Guidelines para. 13; and for example Nellie Munin, Legal Guide to GATS (Wolters Kluwer 2010) 160.

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test.152 According to the disparate impact test, there is a modification of the conditions of

competition if a larger percentage of foreign services and service suppliers is accorded less

favourable treatment in comparison to the same group, based on market conditions and

competitive relationships, of like domestic services and service suppliers.153 The importance of

the determination of the ‘group’ constituting ‘the’ service or ‘the’ service supplier (which is then

to be compared with the same ‘group’ in the ‘likeness’ assessment) is key, as it does not suffice

to find a single foreign service and service provider that is treated less favourably than a like

domestic service and service supplier: the group of foreign services and service suppliers must

be accorded less favourable treatment than the group of domestic like services and service

suppliers.154 In other words, “like imports bear a heavier overall burden than the like domestic

products”.155 In EC – Bananas III, both the AB and the Panel made use of this approach both for

the MFN and national treatment violations.156

38. This disparate impact test can be contrasted to the ‘diagonal (vector) test’ according to

which there is less favourable treatment whenever a foreign service or service supplier is

treated less favourably than any like domestic service or service supplier.157 Such an approach

would thus not require comparing the groups of domestic and imported services or service

suppliers.158 The diagonal test constrains regulatory autonomy more than the disparate impact

test, of which has been argued that it is

152 See Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 98; Nicolas Diebold, ‘Standards of Nondiscrimination in International Economic Law’ (2011) 60 International and Comparative Law Quarterly 831, 843 (with references to commentators in favour of this approach) argues that the case law on Article III:4 GATT 1994 has moved in the direction of the asymmetric impact test. 153 Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 95. 154 Porges and Trachtman, ‘Robert Hudec and Domestic Regulation: The Resurrection of Aim and Effects’ 796. 155 Lothar Ehring, ‘De Facto Discrimination in World Trade Law: National and Most-Favoured-Nation-Treatment or Equal Treatment?’ (2002) 36 Journal of World Trade 921, 925. 156 EC – Bananas III (Panel) paras. 7.332–7.338, 7.349, 7.363–7.368, 7.384, 7.392–7.393 and 7.396; EC – Bananas III (AB) paras. 229-234, 243–244 and 246; Ehring, ‘De Facto Discrimination in World Trade Law: National and Most-Favoured-Nation-Treatment or Equal Treatment?’ 934-935. 157 Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 94. For thorough criticism of this test, see Ehring, ‘De Facto Discrimination in World Trade Law: National and Most-Favoured-Nation-Treatment or Equal Treatment?’ and Flett, ‘WTO Space for National Regulation: Requiem for a Diagonal Vector Test’ 44 and Flett, ‘National Treatment under the General Agreement on Trade in Services (GATS)’, although Flett’s criticism is probably no longer valid after EC – Seals, considering that Flett’s criticism is based on the reasoning that the diagonal vector test is wrong because it crosses the regulatory distinction within the group of like products. As the AB clarified, and as noted, the regulatory distinction is not to be taken into account when assessing less favourable treatment outside Article 2.1 TBT. 158 Ehring, ‘De Facto Discrimination in World Trade Law: National and Most-Favoured-Nation-Treatment or Equal Treatment?’ 946.

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“a restriction on the concept of discrimination itself that should put a needed brake

on the creeping WTO regulation of domestic intervention. In some way, it may

become the functional equivalent of the Keck ruling by the [ECJ] in that both rulings,

after a period of broadly interpreting trade disciplines, impose certain limits that

preserve the regulatory autonomy of states”.159

Moreover, this test results in a “greater flexibility for objective distinctions between products”.160

39. In the few GATS disputes, panels have not had to deal with the most difficult examples of

such disparate impact. Future case law will have to clarify to what extent the services context

plays a role in determining how the disparate impact test is interpreted. For example, the

timeframe of assessing the modification of the conditions of competition is relevant, i.e. whether

to assess the modification in the short term (in which case there would be more chance of

finding a violation) or the long term (taking into account that service suppliers are free to adapt

to the new rules, in which case there is less chance of a modification of the conditions of

competition).161

CONCLUSION: CONSTRAINTS ON REGULATORY AUTONOMY

40. The interpretation of ‘likeness’ and ‘less favourable treatment’ is crucial for the assessment

of the constraints on regulatory autonomy that result from the national treatment obligation.162 A

159 Joost Pauwelyn, ‘Recent Books on Trade and Environment: GATT Phantoms Still Haunt the WTO’ (2004) 15 European Journal of International Law 575, 583. 160 Ehring, ‘De Facto Discrimination in World Trade Law: National and Most-Favoured-Nation-Treatment or Equal Treatment?’ 953. 161 Flett, ‘National Treatment under the General Agreement on Trade in Services (GATS)’ 76-77. 162 Krajewski, National Regulation and Trade Liberalization in Services 96-97; Diebold, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS 94-96 draws up a matrix of the potential constraints on regulatory autonomy that result from different interpretations of likeness and less favourable treatment. This table illustrates the interaction of different interpretations of both conditions vis-à-vis the overall constraints on regulatory autonomy from the national treatment and MFN obligations. This approach differs from that in Pauwelyn, ‘The Unbearable Lightness of Likeness’ 363, where it is noted that:

““likeness” is only the trigger or threshold, not the substantive test. Broadly defining likeness activates the test more often. Yet, it should not normally lead to more findings of violation: If the regulation distinguishes between products based on genuine features that are not origin-based […] then the regulation, even where the adjudicator presumed “likeness”, would not be found to distinguish based on origin anyhow. Thus, the regulation would be permissible not so much because it distinguishes between “unlike” products, but because the complainant could not prove that it distinguishes based on origin”.

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first issue is the relevance of the ‘regulatory purpose’ of the measure, i.e. whether it pursues a

legitimate policy. It has been noted that a strict denunciation of taking into account legitimate

policies in assessing a measure’s compliance with non-discrimination obligations in GATS may

“undermine sovereign regulatory powers” to a larger degree than is the case for trade in goods,

considering that service suppliers are potentially affected by a much larger range of

regulations.163 Disciplines on trade in services have the potential to encroach on socially

delicate matters, and information asymmetries related to inter alia the intangible nature of

services often require substantial regulatory intervention. Nonetheless, in my view, the door for

taking into account ‘regulatory’ elements in the analysis of less favourable treatment has been

shut completely by the AB in EC – Seal Products. Regardless of its regulatory purpose, if a

governmental measure has a negative impact on the competitive opportunities of foreign

services and service suppliers as compared to the group of like domestic services or service

suppliers, this will amount to a finding of a modification of the conditions of competition and

therefore to less favourable treatment. The sole exception is the requirement that there be a

genuine relationship between the measure and the detrimental impact.

41. The current approach towards less favourable treatment in GATT 1994 case law, read in

conjunction with the limited GATS case law,164 considerably constrains regulatory autonomy as

the sole relevant factor for establishing a violation is whether economic market conditions have

been altered. The wide interpretation to such an alteration, i.e. a modification of the conditions

of competition, strengthens these concerns. The trend towards a purely market-based

assessment may be deplored from the perspective of regulatory autonomy, although this may

be mitigated by applying the disparate impact test.

42. However, the condition of less favourable treatment is but one element in a larger whole of

tests and conditions. Therefore, if it is still true that “elements having to do with the ‘aims and

effects’ doctrine” are reappearing in the assessment of non-discrimination obligations,165 this will

have to occur in the likeness analysis. I have argued in favour of a GATT 1994-like ‘competitive

Under the disparate impact test, the scope of likeness is however relevant, as the impact on the group of like services and service suppliers is to be compared: the wider the group, the more chances of having a disparate detrimental impact vis-à-vis foreign services and service suppliers. I therefore follow Diebold, not Pauwelyn. 163 Zdouc, ‘WTO Dispute Settlement Practice Relating to the GATS’ 342. 164 In EC – Bananas III, a de facto discriminatory measure was assessed in a manner that can be classified as following the disparate impact test. See Zdouc, ‘WTO Dispute Settlement Practice Relating to the General Agreement on Trade in Services’ 408-409, who notes that the Panel’s approach to de facto discrimination was cautious. 165 Leroux, ‘Eleven Years of GATS Case Law: What Have We Learned?’ 782.

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likeness’ approach for services. However, a crucial contextual difference with GATT 1994, is the

likeness of service suppliers. Assessing the likeness of service suppliers on the basis of what

has been argued above allows for some wiggle room for regulators. Taking into account

consumer habits and preferences, and the characteristics of the service supplier insofar as

relevant for the supply of the service allows for some form of ‘regulatory likeness’ in addition to

‘competitive likeness’. The consequence of doing so is that, to some extent, regulatory

measures may contribute to a finding of ‘unlikeness’.166

43. Finally, it must be recalled that the scope of the national treatment obligation is limited: it is a

conditional obligation dependant on whether a Member has scheduled specific commitments

and subject to any limitations therein. Moreover, the exceptions in GATS allow a Member to

adopt measures that violate the national treatment obligation regardless of their specific

commitments, if, by doing so, they respect the conditions set out for the use of the exception.

166 I nonetheless do not agree with Donald H Regan, ‘Regulatory Purpose and “Like Products” in Article III:4 of the GATT (With Additional Remarks on Article III:2)’ (2002) 36 Journal of World Trade 443, who sees a much broader role for regulatory purpose in the likeness analysis. As explained above, I attempt to apply the existing, and apparent, likeness analysis in order to cater for concerns specific to the context of services. As noted, I neither believe that, after EC – Seal Products, there is room for such considerations under the less favourable treatment analysis, contrary to what is argued in Donald H Regan, ‘Regulatory Purpose in GATT Article III, TBT Article 2.1, the Subsidies Agreement, and Elsewhere: Hic et Ubique’ in Geert Van Calster and Denise Prévost (eds), Research Handbook On Environment, Health And The WTO (Edward Elgar 2013).

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BIBLIOGRAPHY

Case law

Canada – Certain Measures Affecting the Automotive Industry WT/DS139/R, WT/DS142/R, Panel report adopted 19 June 2000

Canada – Certain Measures Affecting the Automotive Industry WT/DS139/AB/R, WT/DS142/AB/R, AB report adopted 19 June 2000

Canada – Certain Measures Concerning Periodicals WT/DS31/AB/R, AB report adopted 30 July 1997

China – Measures Affecting Electronic Payment Services WT/DS413/R, Panel report adopted 31 August 2012

China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Products WT/DS363/R, Panel report adopted 19 January 2010

Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes WT/DS302/AB/R, AB report adopted 19 May 2005

European Communities – Anti-Dumping Measure on Farmed Salmon from Norway WT/DS337/R, Panel report adopted 15 January 2008

European Communities – Measures Affecting Asbestos and Asbestos-Containing Products WT/DS135/AB/R, AB report adopted 5 April 2001

European Communities – Measures Affecting the Approval and Marketing of Biotech Products WT/DS293/R, Panel report adopted 21 November 2006

European Communities – Measures Affecting Trade in Large Civil Aircraft WT/DS316/AB/R, AB report adopted 1 June 2011

European Communities – Measures Prohibiting the Importation and Marketing of Seal Products WT/DS400/AB/R, AB report adopted 18 June 2014

European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs WT/DS174/R, Panel Report adopted 20 April 2005

European Communities – Regime for the Importation, Sale and Distribution of Bananas WT/DS27/R, Panel report adopted 25 September 1997

European Communities – Regime for the Importation, Sale and Distribution of Bananas WT/DS27/AB/R, AB report adopted 25 September 1997

Italian Discrimination Against Imported Agricultural Machinery L/833, GATT Panel report, adopted 23 October 1958, BISD 7S/60

Japan – Taxes on Alcoholic Beverages WT/DS8/AB/R, AB report adopted 1 November 1996

39

Japan – Taxes on Alcoholic Beverages WT/DS8/R, Panel report adopted 1 November 1996

Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef WT/DS161/AB/R, AB report adopted 10 January 2001

Korea – Taxes on Alcoholic Beverages WT/DS75/R, Panel report adopted 17 February 1999

Philippines – Taxes on Distilled Spirits WT/DS396/AB/R, WT/DS403/AB/R, AB report adopted 20 January 2012

Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines WT/DS371/AB/R, AB report adopted 15 July 2011

United States – Certain Country of Origin Labelling (COOL) Requirements WT/DS384/AB/R, WT/DS386/AB/R, AB report adopted 23 July 2012

United States – Certain Country of Origin Labelling (COOL) Requirements (Recourse to Article 21.5 of the DSU by Canada and Mexico) WT/DS384/RW, WT/DS386/RW, Panel report circulated 20 October 2014, not yet adopted

United States – Measures Affecting Alcoholic and Malt Beverages DS23/R, GATT Panel report, adopted 19 June 1992, BISD 39S/206

United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services WT/DS285/R, Panel report adopted 20 April 2005

United States – Measures Affecting the Production and Sale of Clove Cigarettes WT/DS406/R, Panel report adopted 24 April 2012

United States – Measures Affecting the Production and Sale of Clove Cigarettes WT/DS406/AB/R, AB report adopted 24 April 2012

United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products WT/DS381/R, Panel report adopted 13 June 2012

United States – Restrictions on Imports of Tuna DS21/R, GATT Panel report, 3 September 1991, unadopted, BISD 39S/155

United States – Standards for Reformulated and Conventional Gasoline WT/DS2/R, Panel report adopted 20 May 1996

United States – Standards for Reformulated and Conventional Gasoline WT/DS2/AB/R, AB report adopted 20 May 1996

United States – Tax Treatment for “Foreign Sales Corporations” (Recourse to Article 21.5 of the DSU by the EC) WT/DS108/AB/RW, AB report adopted 20 March 2000

United States – Taxes on Automobiles DS31/R, GATT Panel report, 11 October 1994, unadopted

40

United States Section 337 of the Tariff Act of 1930 L/6439, GATT Panel report, adopted 7 November 1989, BISD 36S/345

Books and chapters in books

De Meester B and Coppens D, ‘Mode 3 of the GATS: A Model for Disciplining Measures Affecting Investment Flows?’ in Drabek Z and Mavroidis PC (eds), Regulation of Foreign Investment: Challenges to International Harmonization (World Scientific 2013)

Diebold N, Non-Discrimination in International Trade in Services: 'Likeness' in WTO/GATS (Cambridge University Press 2010)

Flett J, ‘National Treatment under the General Agreement on Trade in Services (GATS)’ in Kamperman Sanders A (ed), The Principle of National Treatment in International Economic Law: Trade, Investment and Intellectual Property (Edward Elgar 2014)

Krajewski M, National Regulation and Trade Liberalization in Services (Kluwer Law International 2003)

Krajewski M and Engelke M, ‘Article XVII GATS’ in Wolfrum R, Stoll P-T and Feinäugle C (eds), Max Planck Commentaries on World Trade Law: WTO - Trade in Services, vol 6 (Martinus Nijhoff 2008)

Low P and Mattoo A, ‘Is There a Better Way? Alternative Approaches to Liberalization Under the GATS’ in Sauvé P and Stern RM (eds), GATS 2000: New Directions in Services Trade Liberalization (Brookings Institution 2000)

Molinuevo M, Protecting Investment in Services: Investor-State Arbitration Versus WTO Dispute Settlement (Wolters Kluwer 2012)

Munin N, Legal Guide to GATS (Wolters Kluwer 2010)

Nicolaïdis K and Trachtman JP, ‘From Policed Regulation to Managed Recognition in GATS’ in Sauvé P and Stern RM (eds), GATS 2000: New Directions in Services Trade Liberalization (Brookings Institution 2000)

Pauwelyn J, ‘The Unbearable Lightness of Likeness’ in Panizzon M, Pohl N and Sauvé P (eds), GATS and the Regulation of International Trade in Services (Cambridge University Press 2008)

Poretti P, The Regulation of Subsidies Within the General Agreement on Trade in Services of the WTO: Problems and Prospects (Kluwer 2009)

Regan DH, ‘Regulatory Purpose in GATT Article III, TBT Article 2.1, the Subsidies Agreement, and Elsewhere: Hic et Ubique’ in Van Calster G and Prévost D (eds), Research Handbook On Environment, Health And The WTO (Edward Elgar 2013)

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Roessler F, ‘Increasing Market Access Under Regulatory Heterogeneity: The Strategies of the World Trade Organisation’ in OECD (ed), Regulatory Reform and International Market Openness (OECD 1996)

Sauvé P and Stern RM, ‘New Directions in Services Trade Liberalization: An Overview’ in Sauvé P and Stern RM (eds), GATS 2000: New Directions in Services Trade Liberalization (Brookings Institution 2000)

Trachtman JP, ‘Lessons for the GATS from Existing WTO Rules on Domestic Regulation’ in Mattoo A and Sauvé P (eds), Domestic Regulation & Service Trade Liberalization (World Bank & Oxford University Press 2003)

Wolfrum R, ‘Article II GATS’ in Wolfrum R, Stoll P-T and Feinäugle C (eds), Max Planck Commentaries on World Trade Law: WTO - Trade in Services, vol 6 (Martinus Nijhoff 2008)

Van den Bossche P and Zdouc W, The Law and Policy of the World Trade Organization (3rd edn, Cambridge University Press 2013)

Verhoosel G, National Treatment and WTO Dispute Settlement: Adjudicating the Boundaries of Regulatory Autonomy (Hart 2002)

Zdouc W, ‘WTO Dispute Settlement Practice Relating to the General Agreement on Trade in Services’ in Ortino F and Petersmann E-U (eds), The WTO Dispute Settlement System 1995-2003 (Kluwer Law International 2004)

Journal articles

Abu-Akeel AK, ‘The MFN as it Applies to Service Trade: New Problems for an Old Concept’ (1999) 33 Journal of World Trade 103

Adlung R, ‘Public Services and the GATS’ (2006) 9 Journal of International Economic Law 455

De Meester B, ‘Testing European Prudential Conditions for Banking Mergers in the Light of Most Favoured Nation in the GATS’ (2008) 11 Journal of International Economic Law 609

Diebold N, ‘The Morals and Order Exceptions in WTO Law: Balancing the Toothless Tiger and the Undermining Mole’ (2008) 11 Journal of International Economic Law 43

–––, ‘Standards of Nondiscrimination in International Economic Law’ (2011) 60 International and Comparative Law Quarterly 831

Ehring L, ‘De Facto Discrimination in World Trade Law: National and Most-Favoured-Nation-Treatment or Equal Treatment?’ (2002) 36 Journal of World Trade 921

Emch A, ‘Same Same But Different? Fiscal Discrimination in WTO Law and EU Law: What Are ‘Like’ Products?’ (2005) 32 Legal Issues of Economic Integration 369

Fauchald OK, ‘Flexibility and Predictability Under the World Trade Organization’s Non-Discrimination Clauses’ (2003) 37 Journal of World Trade 443

42

Flett J, ‘WTO Space for National Regulation: Requiem for a Diagonal Vector Test’ (2013) 16 Journal of International Economic Law 37

Goco JB, ‘Non-Discrimination, ``Likeness'', and Market Definition in World Trade Organization Jurisprudence’ (2006) 40 Journal of World Trade 315

Horn H and Mavroidis PC, ‘Still Hazy after All These Years: The Interpretation of National Treatment in the GATT/WTO Case-law on Tax Discrimination’ (2004) 15 European Journal of International Law 39

Hudec RE, ‘GATT/WTO Constraints on National Regulation: Requiem for an "Aim and Effects" Test’ (1998) 32 The International Lawyer 619

Leroux E, ‘Eleven Years of GATS Case Law: What Have We Learned?’ (2007) 10 Journal of International Economic Law 749

Mattoo A, ‘National Treatment in the GATS: Corner-Stone or Pandora's Box?’ (1997) 31 Journal of World Trade 107

Mattoo A and Subramanian A, ‘Regulatory Autonomy and Multilateral Disciplines: The Dillema and a Possible Resolution’ (1998) 1 Journal of International Economic Law 303

Mavroidis PC, ‘Driftin’ too Far from Shore – Why the Test for Compliance with the TBT Agreement Developed by the WTO Appellate Body is Wrong, and What Should the AB Have Done Instead’ (2013) 12 World Trade Review 509

Natens B and Geraets D, ‘Modification of the Conditions of Competition for Goods and Services: The Side-track that Never Was’ (forthcoming) 12 Manchester Journal of International Economic Law

Pauwelyn J, ‘Recent Books on Trade and Environment: GATT Phantoms Still Haunt the WTO’ (2004) 15 European Journal of International Law 575

Porges A and Trachtman JP, ‘Robert Hudec and Domestic Regulation: The Resurrection of Aim and Effects’ (2003) 37 Journal of World Trade 783

Regan DH, ‘Regulatory Purpose and “Like Products” in Article III:4 of the GATT (With Additional Remarks on Article III:2)’ (2002) 36 Journal of World Trade 443

Zdouc W, ‘WTO Dispute Settlement Practice Relating to the GATS’ (1999) 2 Journal of International Economic Law 295

Other documents

Border Tax Adjustments, (Report of the Working Party adopted on 2 December by the GATT Contracting Parties, 1970)

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Cossy M, Determining "Likeness" under the GATS: Squaring the Circle? (World Trade Organization Economic Research and Statistics Division Staff Working Paper ERSD-2006-08, 2006)

General Agreement on Tariffs and Trade, MTN.GNS/W/164, Scheduling of Initial Commitments in Trade in Services: Explanatory Note (3 September) (1993)

S/L/92, Guidelines for the Scheduling of Specific Commitments under the General Agreement on Trade in Services (GATS) (Adopted by the Council for Trade in Services 23 March)

S/WPGR/9, Subsidies and Trade in Services (Note by the Secretariat 6 March 1996)

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PARTNERS

NEDERLANDS

Het Leuven Centre for Global Governance Studies

(www.globalgovernancestudies.eu) coördineert de derde generatie van het

Steunpunt “Buitenlands beleid, internationaal ondernemen en ontwikkelingssamenwerking” voor de Vlaamse Regering. Een Steunpunt heeft als doel de wetenschappelijke ondersteuning van Vlaams beleid.

Het project brengt 17 promotoren en 10 junior onderzoekers (waarvan acht doctoraatsstudenten) samen. Het Steunpunt doet aan (a) dataverzameling en -analyse, (b) korte termijn beleidsondersteunend wetenschappelijk onderzoek, (c) fundamenteel wetenschappelijk onderzoek en (d) wetenschappelijke dienstverlening.

We werken samen met een aantal partners: het Antwerp Centre for Institutions and Multilevel Politics, de Vlerick Leuven Gent Management School en H.U.Brussel. Binnen de KU Leuven maken ook collega’s verbonden aan de Faculteit Economie, het Instituut voor Internationaal en Europees Beleid, de Onderzoekseenheid Internationaal en Buitenlands Recht, het Instituut voor Internationaal Recht, het Instituut voor Europees Recht en HIVA - Onderzoeksinstituut voor Arbeid en Samenleving deel uit van het project.

ENGLISH

The Leuven Centre for Global Governance Studies coordinates a Policy Research Centre on "Foreign Affairs, International Entrepreneurship and Development Cooperation" for the Flemish Government. A Policy Support Centre aims to scientifically support Flemish regional policies. The project brings together 17 senior and 10 junior researchers (including eight PhD students).

The Centre conducts (a) data collection and analysis, and provides (b) short-term policy supporting research, (c) fundamental scientific research and (d) scientific services.

The Policy Research Centre is based on an inter-university consortium led by the

Leuven Centre for Global Governance Studies (www.globalgovernancestudies.eu) in

cooperation with the Antwerp Centre for Institutions and Multilevel Politics, the Vlerick Leuven Gent Management School and the H.U.Brussel. Within the KU Leuven, colleagues from the Faculty of Business and Economics, the HIVA - Research Institute for Work and Society, the Institute for International and European Policy, the Research Unit International and Foreign Law, the Institute for International Law, and the Institute for European Law are also involved in the project.

http://www.globalgovernancestudies.eu/

http://www.globalgovernancestudies.eu/

http://www.steunpuntiv.eu/

Documents

Regulatory Autonomy Constraints From The National Treatment