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Report On Business WTO's asbestos decision a landmark for local import bans

There are World Trade Organization cases Canada deserves to win, but loses. Those are the tough ones. And there are cases Canada deserves to lose, and loses. Those may be not as tough. The asbestos dispute -- Canada versus France -- is just such an example.

That case -- which has a lot to do with internal Canadian politics and Ottawa's efforts to show Quebec that the federal government can look after the province's interests -- was brought by Canada to challenge France's ban imposed on chrysotile asbestos imports. Almost all of it is mined in Quebec.

The basis of Canada's claim was that the ban violated the WTO's rules on preventing discrimination against imported goods, and could not otherwise be justified as a legitimate health protection measure.

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The French countered that even if the ban theoretically discriminated against Canadian asbestos, it was permitted under the so-called "general exceptions" clause found in Article XX of the General Agreement on Tariffs and Trade (the original 1947 GATT is now part of the larger, omnibus 1994 WTO Agreement).

Canada has lost the case, judging from the leaked information of the still confidential preliminary ruling made by a WTO panel in June. The panel upheld France's claim that Article XX permitted trade-restrictive measures "necessary to protect human, animal or plant life or health."

The upholding of that exception represents an important milestone in the annals of WTO dispute settlement. The organization has been criticized -- somewhat unfairly -- because dispute settlement panels have been seen to be giving priority to free trade over national measures aimed at environmental and health protection.

In a famous dispute between the United States and Mexico and some other developing countries, a previous panel struck down a U.S. law aimed at protecting dolphins because it also imposed a ban on tuna imports from countries that failed to ensure that their tuna fishermen had protective dolphin devices on their nets.

Recently, another WTO panel struck down a European-wide ban on hormone-treated beef, on the grounds that there were insufficient scientific studies and risk assessments to justify the prohibition. Canada and the United States won that case and are now imposing punitive retaliatory duties on European Union imports because Brussels has refused to end the ban.

The asbestos case is significant because it could represent a change in direction by WTO panels and a recognition that trade interests must sometimes give way to broader environmental and public health concerns.

Of course, WTO panels apply the law and scrupulously ensure that interpretations of treaty provisions are justified on legal grounds. No single decision can be taken to mean that there has been a green revolution in WTO jurisprudence.

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But key here is the ground-breaking acceptance by the asbestos panel that the human health exception in Article XX can now justify an import ban that otherwise offended the free-trade principles of the GATT.

Believe it or not, this is the first time in GATT history that a panel has recognized the validity of this particular exception. The question now is what impact this decision will have on the raging debate at the WTO over import prohibitions on genetically modified organisms, a key issue on the organization's millennium agenda. Lawrence Herman is international trade counsel to Cassels Brock & Blackwell LLP in Toronto.

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