World Trade Review

Research Article

The meaning of ‘necessary’ in GATT Article XX and GATS Article XIV: the myth of cost–benefit balancing

DONALD H. REGANa1 c1

a1 William W. Bishop, Jr. Collegiate Professor of Law, University of Michigan

Abstract

Conventional wisdom tells us that in KoreaBeef, the Appellate Body interpreted the word ‘necessary’ in GATT Article XX to require a cost–benefit balancing test. The Appellate Body is supposed to have applied this test also in EC–Asbestos, US–Gambling (involving GATS Article XIV), and Dominican Republic–Cigarettes. In this article I demonstrate, by detailed analysis of the opinions, that the Appellate Body has never engaged in such balancing. They have stated the balancing test, but in every case they have also stated the principle that Members get to choose their own level of protection, which is logically inconsistent with judicial review by cost–benefit balancing. And they have decided every case by reference to the ‘own level of protection’ principle. The Appellate Body is right not to balance. Balancing is not authorized by the treaty texts, and it is not needed to prevent inefficient harm to foreign interests.

Correspondence:

c1 Email: donregan@umich.edu

Footnotes

Thanks to Rob Howse, Steve Charnovitz, Federico Ortino, Lorand Bartels, and an anonymous reviewer for comments on previous drafts.