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Brendan McGivern is the executive partner of the law firm White & Case LLP in Geneva.

The great Canadian sealing debate has moved offshore – all the way to the headquarters of the World Trade Organization (WTO) in Geneva. On May 22, the highest judicial tribunal of the WTO, the Appellate Body, issued a narrow ruling that the EU ban on seal products violated WTO rules. Does this mean that Canada can now resume exporting seal products to Europe? Don't bet on it.

Brussels imposed its ban in 2010, following years of acrimonious debate between Canada and the EU on whether the seal hunt was humane. The EU argued before the WTO that "because of the way in which seals are killed, the EU public regards seal products from commercial hunts as morally objectionable and is repelled by their availability in the EU market."

When Canada challenged the EU ban, the EU argued in part that it could rely on an exception in WTO rules that permits laws "necessary to protect public morals".

The WTO Appellate Body agreed that the EU ban could be "provisionally justified" on the basis of public morals – in other words, that public morals are a legitimate and legal basis for the ban's existence. But it went on to rule that the ban nonetheless violated WTO rules because it was applied in a discriminatory way.

The discrimination arose from the way the EU ban was structured. The EU wanted to prohibit seal products from commercial hunts. But it allowed in seal products under certain exceptions, including where they resulted from "hunts traditionally conducted by Inuit and other indigenous communities".

Yet only a tiny portion of the Canadian seal hunt – about 5 per cent – fell under this exception. Meanwhile, the Inuit of Greenland conduct a significantly large seal hunt, essentially on a commercial scale, and they are granted access to the EU market. The Appellate Body noted that "virtually all" Greenlandic seal products benefitted from the Inuit exception while the "vast majority" of Canadian seal products did not. It therefore found that the ban was discriminatory against Canada.

The Appellate Body did not buy the distinction the EU tried to draw between Inuit and "commercial" hunts. It noted that the exception for Inuit hunts – which Greenland took advantage of on a vast scale – was a "significant carve-out" from the ban. The Appellate Body did not see how this carve-out "can be reconciled with, or is related to, the policy objective of addressing EU public moral concerns regarding seal welfare".

What happens next? In the immediate term – nothing. The WTO will give the EU a grace period to comply with the ruling – probably about a year. It must comply, but the EU can determine how it will do so.

It is important to stress that the WTO ruled against the ban principally because of the way it was applied in practice. The EU could seek to fix that problem by keeping the ban in place but applying it in a non-discriminatory way. Some in the EU may now push for a ban that would apply uniformly to all seal products, with no exceptions for any Inuit hunts. That seems unlikely. Another possibility would be for the EU to take steps to try to facilitate access to the EU market by the relatively small number of Canadian Inuit seal hunters. But access to the EU market by the Canadian commercial seal hunt will likely remain closed.

A broader implication of this ruling is that an important precedent has been set for the role of animal welfare in trade agreements. The Appellate Body has accepted in principle that animal welfare can be considered as a measure "necessary to protect public morals", and this reasoning can be applied in future laws to protect other animals – in the EU and elsewhere.

But there is a potential problem here. No one would dispute that animal welfare is both important and legitimate. However, moving beyond this uncontroversial principle to actual animal welfare laws, there will be clear differences of opinion as to what animal welfare policies should prevail over trade obligations. This could be particularly problematic given the diverse approaches of WTO Member countries to animal protection. For example, farmers in North America and the EU have many strongly-held and sincere differences of opinion as to what measures should be taken to promote animal welfare.

There will be no easy answers to these questions, and it will likely take future WTO rulings to sort this out. Expect additional trade friction on these issues in the years ahead.

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