Jean Monnet Center at NYU School of Law


VIII. The Current Relevance of the Question

With just a few hundred disputes to date, the case density of the GATT/WTO system is still relatively low. This might explain why the full potential consequences of the diagonal test have not yet become apparent in practice. The above synopsis of the dispute settlement reports so far has shown that panels and the Appellate Body never mandated an asymmetric impact test and that nonetheless all cases represented some form of asymmetric impact on the exports of the complaining party. If there were a systemic guarantee that Members normally would not bring symmetric cases where the negative impact on imports and domestic products is equivalent, the topic of this paper would be largely academic.

Speculating about the (distant) future, WTO obligations with direct effect in the domestic legal orders would certainly unleash the full potential of the diagonal approach thanks to the commercial interest of market operators. For the time being, one can assume that countries only bring cases when they have something to gain. That would not be the case if, overall, their exports benefit and suffer equally under the practice of the country of destination. This cannot be taken for granted, however, as it may well be that the disadvantaged sector has better access to the political or administrative institutions which decide on the introduction of a WTO complaint. It might also be that the overall effects of the measure at issue are balanced between domestic goods and all imports, but not between the imports from every source country. Then there could be a sufficient economic incentive to bring the case. Furthermore, the history of the GATT has repeatedly shown that there can also be political, tactical incentives for bringing disputes against trading partners. If WTO Members make use of the possibilities which the diagonal approach theoretically provides, they could overwhelm the dispute settlement system with an unlimited number of complaints. Panels and the Appellate Body probably do not have the resources to review so generally countless origin-neutral national laws and to set the boundaries for internal regulatory action.

Even if in practice the issue is not yet of utmost urgency, it might be preferable to get things straight before they needlessly derail and corrections appear as painful jurisprudential volte-face. The case synopsis has also shown that there already exists a tendency towards an asymmetry requirement in most of the recent Appellate Body reports. It therefore does not seem that a clarification, as it may already have happened in paragraph 100 of the Asbestos Appellate Body Report, would seriously jeopardize the free trade discipline of the WTO. Benefits accorded to the domestic industry at the expense of imports or to imports from one country at the expense of imports from other countries would continue to qualify as discrimination that needs to be justified.




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