Diverging EU and WTO Perspectives on Extraterritorial Process Regulation

Abstract

This paper looks at the relevant case law from the EU and WTO bodies concerning extraterritorial process regulation - PPMs. We note that while both bodies have an emergent and incomplete jurisprudence in this area, there are differences of approach and sometimes of principle in how they view PPM measures and what may be called 'extraterritoriality'. The EU, with a somewhat wider global and internal mission, and a self-perception of deeper and wider legitimacy, is relaxed, even enthusiastic about the use of trade to leverage social and environmental change. This fits with its basic legal documents, and consistent stated policy approach, which is that economic policy must always take account of its non-economic context. The WTO, by contrast, while not dismissive in principle of PPM measures, displays a greater caution, entirely in tune with the widespread suspicion of PPMs in the international trade law community and the logical prioritising of free trade within the WTO context.

These divergences in attitude, this paper argues, have the potential to lead to hard conflict between the world's largest trading jurisdiction and the global trade regulator. That suggestion is brought into sharp relief by the recent ATAA case at the ECJ, in which the Court of Justice dismissed out of hand claims that the EU's emissions trading practices were extraterritorial when applied to airlines. The relevant parts of the judgment are considered in detail in the paper.

Keywords: EU law, WTO, PPM, extraterritoriality, trade and environment, international trade