Rethinking National Treatment and the Role of Regulatory Purpose: Lessons from the 'Theory of Distortions and Welfare'

33 Pages Posted: 17 Jul 2015 Last revised: 2 Aug 2016

See all articles by Weihuan Zhou

Weihuan Zhou

University of New South Wales (UNSW) - UNSW Law & Justice

Date Written: July 16, 2015

Abstract

The article studies the ‘Theory of Distortions and Welfare’ and explains the significance of the theory to the interpretation and application of the GATT national treatment rule, and in particular, to the issue of whether regulatory purpose should be considered in determining whether an origin-neutral measure is consistent with the national treatment rule. The article argues that the theory provides important interpretative guidance on the role of regulatory purpose under the national treatment rule. Essentially, the theory suggests that purpose inquiries are fundamental to the determination of NT-legality of an origin-neutral measure and that in assessing purpose, the WTO tribunals should take a two-step test by, firstly, identifying the genuine policy objective of the measure and, secondly, evaluating whether the measure contains any discriminatory elements that are unnecessary for the attainment of the given objective. Using this approach, the WTO tribunals can effectively regulate Members’ choice of policy instruments to pursue a chosen policy objective by encouraging the use of economically efficient measures without unduly interfering with Members’ choice of policy objectives. The interpretative guidance drawn from the theory, therefore, provides an effective way to strike a balance between trade liberalization and domestic autonomy.

Keywords: WTO, National Treatment, Regulatory Purpose, Theory of Distortions and Welfare

Suggested Citation

Zhou, Weihuan, Rethinking National Treatment and the Role of Regulatory Purpose: Lessons from the 'Theory of Distortions and Welfare' (July 16, 2015). Manchester Journal of International Economic Law (2015) 12(3) 243-269. , UNSW Law Research Paper No. 2015-34, Available at SSRN: https://ssrn.com/abstract=2631888

Weihuan Zhou (Contact Author)

University of New South Wales (UNSW) - UNSW Law & Justice ( email )

Kensington, New South Wales 2052
Australia
+61 2 90652102 (Phone)

HOME PAGE: http://https://www.law.unsw.edu.au/staff/weihuan-zhou

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