While we were interns in the Legal Affairs Division of the World Trade Organization (WTO) in 2000, Gabrielle Marceau asked us to research the proportionality principle in international and European Union law. Gabrielle’s request came at a propitious time, because, as our three-month internships were coming to a close, on 11 December 2000, the Appellate Body (AB) circulated its decision in *Korea—Measures Affecting Imports of Fresh, Chilled and Frozen Beef*<fnref n="1" />.

Among other things, in this report the Appellate Body for the first time defined the term “necessary” in Article XX *GATT*. It said, in particular, that:

> a determination of whether a measure, which is not “indispensable”, may nevertheless be “necessary” within the contemplation of Article XX(d), involves in every case a process of weighing and balancing a series of factors which prominently include the contribution made by the compliance measure to the enforcement of the law or regulation at issue, the importance of the common interests or values protected by that law or regulation, and the accompanying impact of the law or regulation on imports or exports.<fnref n="2" />

This explanation of the “necessity” test in Article XX can properly be called seminal. It had a major impact on the way the concept of “necessity” has been applied in subsequent disputes not only within the WTO system, but even beyond it, in investment law.<fnref n="3" /> That said, *Korea—Beef* has sparked controversy as to whether the AB struck the right balance between the pursuit of trade liberalisation and safeguarding WTO Members’ ability to regulate in the public interest.<fnref n="4" />

This contribution revisits this controversy—and what the Appellate Body might have meant—in light of subsequent WTO jurisprudence on the concept of “necessity.” It concludes that while the necessity test remains ambiguous, there is emerging evidence that it may approximate strict proportionality in limited circumstances involving highly trade-restrictive measures, representing a subtle but important evolution in WTO jurisprudence on regulatory space.

<footnote n="1">*Korea—Measures Affecting Imports of Fresh, Chilled and Frozen Beef* *(Complaint by New-Zealand)*(2000), WTO Doc WT/DS161/AB/R (Appellate Body Report) [Appellate Body Report, *Korea—Beef*].</footnote>

<footnote n="2">*Ibid* at para 164.</footnote>

<footnote n="3">In addition to many disputes applying Article XX *GATT*, *Korea—Beef* has influenced the interpretation of the general exception provision in the *GATS*, as well as the necessity obligation in the *TBT Agreement*. *Korea—Beef* has also influenced the interpretation and application of non—WTO law, in particular international investment and trade agreements: see *Continental Casualty Company v The Argentine Republic* (2008), ICSID Case No ARB/03/9, Award (United States*—*Argentina BIT); *UK—Sandeels (EU v UK)* (2025), PCA Case No 2024-45, Ruling, (*EU—UK TCA*).</footnote>

<footnote n="4">See, in particular, Donald Regan, “The Meaning of ‘Necessary’ in GATT Article XX and GATS Article XIV: The Myth of Cost—Benefit Balancing” (2007) 6 World Trade Rev 347.</footnote>
# I. Causation, Necessity and Proportionality

Before turning to the Appellate Body’s definition of “necessity” in *Korea—Beef*, it is perhaps useful to say a few words about how, in EU law, and increasingly in other legal systems, so-called proportionality analysis has become the fundamental way of looking at the type of issue raised in *Korea—Beef*, including “necessity” and “weighing and balancing.”

Proportionality analysis sets out a series of distinct tests for assessing when a measure can be considered to be adopted for—in the broadest sense—a legitimate objective. It is therefore ideally suited to interpreting exceptions, and other rules (e.g. Article 2.2 of the *TBT Agreement*), which require a nexus to be established between a measure and an objective.

The starting point is to identify a legitimate objective—for Article XX *GATT* purposes, these are expressly set out in the subparagraphs of that provision. Having identified such an objective, proportionality analysis includes three distinct tests, each of which addresses different aspects of the relationship between the measure and its objective.<fnref n="5" />

The first of these tests is about the degree to which the measure achieves the objective —in other words, causation. There are different potential variants of this test. At its most generous (to the regulating party), it can be sufficient for that party to have intended for the measure to achieve the relevant objective to some degree, even if this intention failed in reality. But in WTO law this test has always been understood more strictly, in terms of a minimum degree of contribution—or effectiveness—towards achieving an objective, even if this contribution can take some time to manifest.

All variants of proportionality analysis include a version of the first test. But not all involve the second or third tests. The second test applies when a measure is required not just to have some minimal causal connection with its objective, but also to be “necessary” to achieve that objective. This test is not always required, as all students of Article XX of *GATT* will know. For example, Article XX(g) of *GATT*, under which it is sufficient that a measure “relates to” the conservation of exhaustible natural resources, does not include a necessity test. But where a “necessity” test does exist, for example, in paragraphs (a), (b) and (d) of Article XX, the way to work this out is to compare the measure that was adopted with other measures that might have been adopted instead. More specifically, this comparison tests whether there was (or could have been) a hypothetical measure existed that is (a) equally (or comparably) effective, (b) less harmful, and (c) reasonably available to the regulating party.

The third test—termed “strict” proportionality—again focuses solely on the adopted measure, and asks whether the benefits of the measure (in terms of its effectiveness) outweigh its harmful effects. In short, this involves a cost-benefit analysis which prevents a party from adopting a measure that might be “necessary” to achieve a legitimate objective, but does so in an overly harmful manner. For example, if the legitimate objective is to provide consumers with detailed information about the origin of the product at issue, it might be necessary to require retailers to list the origin of every item and processing activity that went into the making of the product. However, the trade restrictive effects of requiring that information might outweigh the importance of providing consumers with this information. The difficulty, however, is that such a test involves one decision-maker (in this case an international tribunal) second-guessing the relative importance to be attributed to different values by another decision-maker (a sovereign state). The other two tests —concerning causation and necessity— do not touch the ability of the regulating state to determine its appropriate level of protection —even if that is about something rather trivial.

This proportionality scheme is presented here as an ideal type of the tests that can be asked of a measure that is justified in terms of a legitimate objective. As noted, not all of these tests need to be asked, and among these tests there are many variants. But proportionality analysis presents a useful framework for understanding what the Appellate Body did in *Korea—Beef*. To this we now turn.

<footnote n="5">Proportionality analysis was famously systematised by Robert Alexy in his 1984 *Habilitationsschrift*, published as *Theorie der Grundrechte* (Baden-Baden: Nomos, 1985), translated by Julian Rivers as*A Theory of Constitutional Rights* (Oxford: Oxford University Press, 2002).</footnote>
# II. The Appellate Body’s Decision on "Necessity" in *Korea—Beef*

The Appellate Body was called to interpret the term “necessary” in Article XX *GATT* in a dispute involving Korea’s dual retail system for the sale of domestic and imported beef. In order to protect consumers against fraudulent practices, the dual retail system required small stores to choose whether to sell domestic or imported beef, while large stores had to sell imported and domestic beef in different sections of the store. The Panel found that the dual retail system violated Korea’s national treatment obligation under Article III:4 *GATT* and was not a measure “necessary to secure compliance with” laws and regulation which are not inconsistent with the GATT including those relating to the prevention of deceptive practices pursuant to Article XX(d) *GATT*.

The Appellate Body, first of all, addressed the issue of the “ordinary meaning of the word ‘necessary’, in its context and in the light of the object and purpose of Article XX, in accordance with Article 31(1) of the Vienna Convention.”<fnref n="6" /> The Appellate Body began by noting that the word “necessary” normally denotes something “that cannot be dispensed with or done without, requisite, essential, needful”.<fnref n="7" /> At the same time, it observed that a standard law dictionary cautions that this word “must be considered in the connection in which it is used, as it is a word susceptible of various meanings.”<fnref n="8" /> Accordingly, noting that the term “necessary” refers to a range of degrees of necessity going from “necessary” understood as “indispensable” to “necessary” taken to mean as “making a contribution to”, the Appellate Body considered that a “necessary” measure is, in this continuum, located significantly closer to the pole of “indispensable” than to the opposite pole of simply “making a contribution to”.<fnref n="9" />

Moving on to “context”, the Appellate Body noted that Article XX(d) is susceptible of application in respect of a wide variety of “laws and regulations” to be enforced, and thus “a treaty interpreter assessing a measure claimed to be necessary to secure compliance of a WTO—consistent law or regulation may, in appropriate cases, take into account the relative importance of the common interests or values that the law or regulation to be enforced is intended to protect.” Accordingly, the Appellate Body concluded, “[t]he more vital or important those common interests or values are, the easier it would be to accept as ‘necessary’ a measure designed as an enforcement instrument.”<fnref n="10" />

Furthermore, according to the Appellate Body, other aspects of the enforcement measure to be considered in evaluating that measure as “necessary” are (a) the extent to which the measure contributes to the realisation of the end pursued, the securing of compliance with the law or regulation at issue and (b) the extent to which the compliance measure produces restrictive effects on international commerce, that is, on imported goods.<fnref n="11" /> For each of these two aspects, the Appellate Body identified some general lessons: respectively, “[t]he greater the contribution, the more easily a measure might be considered to be ‘necessary’”, and “[a] measure with a relatively slight impact upon imported products might more easily be considered as ‘necessary’ than a measure with intense or broader restrictive effects”.<fnref n="12" /> The Appellate Body summarised its brief analysis with what has become known as the “weighing and balancing” test, quoted above.<fnref n="13" />

In connection with its subsequent review of the Panel’s findings, the Appellate Body made two important points with regard to the “necessity” analysis under Article XX *GATT*.

First, as the Panel had relied on the *United States—Section 337* standard for evaluating whether the Korean system was “necessary” (i.e., whether there is an alternative measure reasonably available which is not inconsistent with the *GATT* or which entails the least degree of inconsistency), the Appellate Body clarified how that standard relates with its newly minted “weighing and balancing” test. The Appellate Body stated that the *United States—Section 337* standard “encapsulates the general considerations we have adverted to above”. In other words, the Appellate Body clarified, “the weighing and balancing process we have outlined is comprehended in the determination of whether a WTO—consistent alternative measure which the Member concerned could ‘reasonably be expected to employ’ is available, or whether a less WTO—inconsistent measure is ‘reasonably available’.”<fnref n="14" />

Second, in considering whether the Panel had correctly identified *GATT* consistent alternatives that Korea could have reasonably employed to achieve its policy goals, the Appellate Body firmly recognised that WTO Members “have the right to determine for themselves the level of enforcement of their WTO—consistent laws and regulations”.<fnref n="15" /> However, the Appellate Body concluded that Korea could not have intended to establish a level of protection that *totally eliminates* fraud with respect to the origin of beef sold by retailers (zero-fraud) but that in effect Korea intended more simply to *reduce considerably*the number of cases of fraud. Accordingly, the Appellate Body agreed with the Panel that Korea had not demonstrated that it could not achieve its desired level of enforcement of the *Unfair Competition Act* with respect to the origin of beef sold by retailers by using conventional WTO—consistent enforcement measures such as investigations, fines, record-keeping and policing.<fnref n="16" />

<footnote n="6">Appellate Body Report, *Korea—Beef*, *supra* note 1 at para 159.</footnote>

<footnote n="7">*Ibid* at para 160. The Appellate Body drew this definition from *The New Shorter Oxford English Dictionary* (Oxford: Clarendon Press, 1993), Vol II, at 1895.</footnote>

<footnote n="8">*Ibid*. The Appellate Body drew this paragraph from *Black’s Law Dictionary* (St Paul: West Publishing, 1995) at 1029.</footnote>

<footnote n="9">Appellate Body Report, *Korea—Beef*, *supra* note 1 at para 161.</footnote>

<footnote n="10">*Ibid*at para 162.</footnote>

<footnote n="11">*Ibid* at para 163.</footnote>

<footnote n="12">*Ibid* at para 163.</footnote>

<footnote n="13">*Ibid* at para 164.</footnote>

<footnote n="14">*Ibid* at para 166.</footnote>

<footnote n="15">*Ibid* at para 176. The Appellate Body noted, moreover, that “this has also been recognised by the Panel in *United States — Section 337*, where it said: ‘The Panel wished to make it clear that this [the obligation to choose a reasonably available GATT-consistent or less inconsistent measure] does not mean that a contracting party could be asked to change its substantive patent law or its desired *level of enforcement* of that law’ (emphasis added)”, *ibid*.</footnote>

<footnote n="16">*Ibid* at paras 179—80.</footnote>
# III. What is “Weighing and Balancing”?

What, then, did the Appellate Body mean by “weighing and balancing”? In 2007, Don Regan said that ’[i]t is generally believed that the Appellate Body established a cost—benefit balancing test.”<fnref n="17" /> This would be strict proportionality; the third of the three tests applied in classical proportionality analysis. But Regan also said that “I think this is a misunderstanding.”<fnref n="18" /> Regan’s argument is that strict proportionality, which, as noted above, implies that a regulator’s choice of level of protection is *not* sacrosanct, is logically inconsistent with the idea, expressed elsewhere in *Korea—Beef*, that WTO Members have “the right to determine for themselves the level of enforcement”.<fnref n="19" /> This is a compelling criticism.

This does, however, leave unanswered the question of what the Appellate Body might have meant by “weighing and balancing”. Let us now turn to whether subsequent panels and Appellate Body’s decisions have provided any clarifications as to what might have been meant.

<footnote n="17">Regan, *supra* note 4, at 347.</footnote>

<footnote n="18">*Ibid*.</footnote>

<footnote n="19">Appellate Body Report, *Korea—Beef*, *supra* note 1 at para 176.</footnote>
# IV. The “Necessity” Test and “Weighing and Balancing” after *Korea—Beef*

While the necessity test enunciated by the Appellate Body decision in *Korea—Beef* has invariably been the starting point for any subsequent analysis of necessity under Article XX *GATT* (as well as Article XIV *GATS*), there is certainly a level of ambiguity in the way in which panels and the Appellate Body have subsequently dealt with its “weighing and balancing” element.

One (rare) approach has been to focus principally on the weighing and balancing of the three relevant factors identified by the Appellate Body in *Korea—Beef*: the importance of interests or values being protected by the measure, the measure’s contribution to the end pursued, and the measure’s trade impact. The Panel in *US—Gambling*, for example, suggested that “consideration of whether a reasonably available WTO—consistent alternative measure exists must be taken into consideration in applying [the trade impact] requirement.”<fnref n="20" /> Accordingly, having identified and evaluated each of three relevant factors (including the existence of reasonably available alternatives as part of evaluating the “trade impact”), the Panel carried out a process of “weighing and balancing”.<fnref n="21" />

A different approach has been to focus on the search for a less WTO—inconsistent (and reasonably available) alternative and consider the three relevant factors identified in *Korea—Beef* as mere elements in the search for such alternatives. For example, the Panel in *Brazil—Retreaded Tyres* structured its analysis of the necessity of Brazil’s measure in the following terms:

> Given that the three factors should be taken into account in the assessment of whether a WTO-consistent, or less WTO-inconsistent, alternative measure exists, the Panel will first consider those factors in more detail, and then examine, in light of this analysis, the alternatives identified by the European Communities.<fnref n="22" />

Having reviewed the relevant factors identified by the Appellate Body in *Korea—Beef*, the Panel in *Brazil—Retreaded Tyres*, then undertook a comparison between the challenged measure and possible alternatives.<fnref n="23" /> Despite its reference to “weighing and balancing”, the Panel in *Brazil—Retreaded Tyres* does not appear to have actually carried out any “weighing and balancing”, and simply employed those three factors (importance of the objective pursued, trade restrictiveness of the measure, and contribution of the measure to the objective) in order to “inform the determination of whether a WTO—consistent alternative measure, or a less WTO—inconsistent measure, which the Member concerned could reasonably be expected to employ, is available.”<fnref n="24" />

For its part, the Appellate Body appears to have avoided combining the two components of necessity (weighing and balancing the three relevant factors and the search for a less WTO-inconsistent alternative). Nevertheless, there is an ambiguity in the way the Appellate Body has structured the necessity analysis following *Korea—Beef*. For example, in *US—Gambling*, the Appellate Body clearly distinguished between “weighing and balancing” and “comparison of alternative measures”.<fnref n="25" /> More specifically, the Appellate Body explained that, first of all, “it is for the responding party to make a *prima facie* case that its measure is ‘necessary’ by putting forward evidence and arguments that enable a panel to assess the challenged measure in the light of the relevant factors to be ‘weighed and balanced’ in a given case.”<fnref n="26" /> Crucially, this *prima facie* case is made through “the identification, and weighing and balancing, of relevant factors, such as those identified in *Korea—Beef*.”<fnref n="27" /> Secondly, according to the Appellate Body, if the complaining party raises a WTO—consistent alternative measure that, in its view, the responding party should have taken, the responding party will then be required to demonstrate that such alternative is not “reasonably available”, in the light of the interests or values being pursued and the party’s desired level of protection.<fnref n="28" />

In later decisions, on the other hand, the Appellate Body appears to have treated “necessity” under an overall “weighing and balancing” analysis. In *Brazil—Retreaded Tyres*, the Appellate Body structured the necessity test as follows: first, a panel needs to consider the relevant factors (i.e., the importance of the interests or values at stake, the extent of the contribution to the achievement of the measure’s objective and its trade restrictiveness);<fnref n="29" /> second, if this analysis yields a preliminary conclusion that the measure is necessary, this result needs to be confirmed by comparing the measure with possible alternatives, which may be less trade restrictive while providing an equivalent contribution to the achievement of the objective.<fnref n="30" /> Interestingly, and differently from its decision in *US—Gambling*, the Appellate Body appears to refer to “weighing and balancing” to describe both components of the necessity test, rather than simply to its first part: “[t]he weighing and balancing is a holistic operation that involves putting all the variables of the equation together and evaluating them in relation to each other after having examined them individually, in order to reach an overall judgement.”<fnref n="31" />

As is often the case, the Appellate Body attempts to consolidate its decisions into a consistent jurisprudence. In *China—Audiovisual Services*, while it acknowledged that the language used in its previous decisions in *US—Gambling* and *Brazil—Retreaded Tyres* “is not identical”, the Appellate Body nonetheless affirmed that the approach articulated therein is the “same”.<fnref n="32" /> Emphasising that the necessity analysis is a “sequential process”, the Appellate Body stated that a panel needs “to identify relevant factors and undertake a weighing and balancing process including, where relevant, with respect to proposed alternative measures that may be less trade restrictive while making an equivalent contribution to the relevant objective.”<fnref n="33" />

In the view of the Appellate Body, one clear consequence of including both components (the relevant factors & the less trade restrictive alternatives) under the “weighing and balancing” process is that it allows panels greater flexibility in assessing the necessity of a measure. In *EC—Seal Products*, while it confirmed that there may be circumstances in which a weighing and balancing exercise would not require that a panel proceed to evaluate alternative measures, the Appellate Body also clarified that such weighing and balancing exercise does not (always) mandate a preliminary determination of the necessity of the challenged measure before proceeding to assess those alternatives.<fnref n="34" />

Recent panels have adopted such more flexible approach, whereby the necessity analysis is structured as a holistic weighing and balancing of the following factors: “(1) the importance of the objective; (2) the contribution of the measure to the achievement of the objective pursued; and (3) the trade restrictiveness of the measure. (4) If the preliminary conclusion is that the measure is necessary, the result should be confirmed by comparing the challenged measure with possible, reasonably available, WTO-consistent or less inconsistent alternatives that could have less trade-restrictive effects while making an equivalent contribution to the achievement of the objective pursued.”<fnref n="35" />

<footnote n="20">*United States—Measures Affecting the Cross-Border Supply of Gambling and Betting Services (Complaint by Antigua and Barbuda)* (2004), WTO Doc WT/DS285/R (Panel Report) at para 6.477 [Panel Report, *US—Gambling*].</footnote>

<footnote n="21">*Ibid* at para 6.532. In one short paragraph dedicated to “weighing and balancing,” the Panel first emphasised (i) the “very important societal interests” at issue, (ii) that the measures under review “contribute to the realization of the ends pursued”, and (iii) the measure’s significant impact on trade; and secondly, it highlighted that, despite the United States’ legitimate specific concerns with respect to money laundering, fraud, health and underage gambling that are specific to the remote supply of gambling and betting services, the United States had failed the necessity test as it declined Antigua’s invitation to engage in bilateral and/or multilateral consultations and/or negotiations to determine whether there is a way of addressing its concerns in a WTO—consistent manner. *Ibid* at paras 6.533—535.</footnote>

<footnote n="22">*Brazil—Measures Affecting Imports of Retreaded Tyres (Complaint by European Communities)*(2007), WTO Doc WT/DS332/R (Panel Report) at para 7.105 [Panel Report, *Brazil—Retreaded Tyres*].</footnote>

<footnote n="23">*Ibid* at para 7.149.</footnote>

<footnote n="24">*Ibid* at para 7.150. There is some ambiguity with regard to the approach adopted by the Panel in *Brazil—Retreaded Tyres*as in a later section, the Panel stated that the “assessment of the necessity of the measure under Article XX(b) will be the result of a ‘weighing and balancing’ process, taking into account the factors considered above and the availability of a less trade-restrictive alternative measure, to determine whether the measure at issue is ‘necessary’ within the meaning of Article XX(b).” *Ibid* at para 7.209. However, the Panel eventually concluded that the measure was necessary principally on the basis of its “analysis of the different factors” and the respondent’s demonstration that the alternative measures identified by the complaining member are not reasonably available alternative capable of achieving respondent’s objective. *Ibid* at para 7.215. See also *Dominican Republic—Measures Affecting the Importation and Internal Sale of Cigarettes* (2004), WTO Doc WT/DS302/R (Panel Report) at para 7.215 [Panel Report, *Dominican Republic—Import and Sale of Cigarettes*].</footnote>

<footnote n="25">Appellate Body Report, *US—Gambling* at paras 306—07.</footnote>

<footnote n="26">*Ibid* at para 310.</footnote>

<footnote n="27">*Ibid* at para 323.</footnote>

<footnote n="28">*Ibid* at para 311.</footnote>

<footnote n="29">Panel Report, *Brazil—Retreaded Tyres*, *supra* note 22 at para 178.</footnote>

<footnote n="30">*Ibid*. The Appellate Body also stated that “[t]his comparison should be carried out in the light of the importance of the interests or values at stake.”</footnote>

<footnote n="31">*Ibid* at para 182. This allowed the Appellate Body to reject the claimant/appellant’s claim that the Panel had failed to “actually weighed and balanced the relevant factors”. *Ibid*.</footnote>

<footnote n="32">*China—Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (Complaint by the United States)* (2009), WTO Doc WT/DS363/AB/R (Appellate Body Report) at para 242 [Appellate Body Report, *China—Audiovisual Services*].</footnote>

<footnote n="33">*Ibid*. For some ambiguity with regard to the structure of the necessity test, compare the statements by the Appellate Body decision in *Colombia—Measures Relating to the Importation of Textiles, Apparel and Footwear* (2016) WTO Doc WT/DS461/AB/R (Appellate Body Report) at para 5.70 [Appellate Body Report, *Colombia—Textiles*] (“necessity analysis involves a process of ‘weighing and balancing’ a series of factors […]. In most cases, a comparison between the challenged measure and possible alternatives should *subsequently* be undertaken.” [emphasis added]) and para 5.75 (“The Appellate Body has noted that ‘the very utility of examining the interaction between the various factors of the necessity analysis, and conducting a comparison with potential alternative measures, is that it provides a means of testing these factors as part of a holistic weighing and balancing exercise’.”).</footnote>

<footnote n="34">*European Communities—Measures Prohibiting the Importation and Marketing of Seal Products* (2014), WTO Doc WT/DS400/AB/R, WT/DS401/AB/R (Appellate Body Report) at para 5.215, n 1299 [Appellate Body Report, *EC—Seal Products*]. The Appellate Body thus disagreed with Canada’s assertion that a preliminary determination of necessity is required before proceeding to compare the challenged measure with possible alternatives. *Ibid*. See *Brazil—Certain Measures Concerning Taxation and Charges* (2017), WTO Doc WT/DS472/R (Panel Report) at para 7.608, where the Panel did not consider necessary to make a preliminary decision on whether the measure was “necessary” based on the three factors, but proceeded with consideration of any reasonably available alternatives.</footnote>

<footnote n="35">*Colombia—Measures Relating to the Importation of Textiles, Apparel and Footwear* (2015), WTO Doc WT/DS461/R (Panel Report) at para 7.310 [Panel Report, *Colombia—Textiles*]; *Indonesia—Measures Concerning the Importation of Chicken Meat and Chicken Products* (2017), WTO Doc WT/DS484/R (Panel Report) at para 7.136 [Panel Report, *Indonesia—Chicken*]; *Indonesia—Measures Relating to Raw Materials* (2022), WTO Doc WT/DS592/R (Panel Report) at para 7.302 [Panel Report, *Indonesia—Raw Materials*].</footnote>
# V. The Nature of the Necessity Test: To Balance or not to Balance?

In its broadest terms, the assessment of the necessity of a measure under Article XX *GATT* (as well as Article XIV *GATS*) entails an “in depth, holistic analysis of the relationship between the measure and the protection of [one of the policy objectives identified in Article XX].”<fnref n="36" /> However, this does not tell us much about the *kind* of relationship (between the measure and its objective) that a respondent member has to show in order to justify an otherwise *GATT*—inconsistent measure. Let us thus examine how WTO adjudicators have applied the necessity test enunciated in *Korea—Beef*, focusing here only on the “weighing and balancing” the three relevant factors.<fnref n="37" />

All WTO adjudicators have started their necessity assessment (under Article XX *GATT* and Article XIV *GATS*) by considering the three relevant factors identified by the Appellate Body in *Korea—Beef*: the importance of interests or values being protected by the measure, the measure’s contribution to the end pursued, and the measure’s trade impact. Interestingly, while the Appellate Body had stated in *Korea—Beef* that these three factors are not exhaustive (i.e., they are only the most “prominent”), to our knowledge no additional factor has ever played a role in subsequent decisions.

More interestingly, the first few panels applying the *Korea—Beef* necessity analysis appear to have understood the “weighing and balancing” of the three relevant factors to entail simply a consideration of each of those factors: How important are the interests or values being protected? What is the extent of the contribution that the measure has on the objective being pursued? What is the extent of the measure’s negative impact on trade? In other words, one could say that these early adjudicators did a lot of “weighing” of (i.e., assessing) each of those three factors individually but not much “balancing”, at least if one understands the latter as comparing or contrasting each factor against another. This approach is perhaps clearest in those early panel decisions, referred to in the previous section (including *Dominican Republic—Cigarettes* (2004)<fnref n="38" />, *Brazil—Retreaded Tyres* (2007)<fnref n="39" />, and *Colombia—Ports of Entry* (2009)<fnref n="40" />), which focused their necessity analysis principally on the search for a less WTO-inconsistent (or restrictive) alternative and considered the three relevant factors as a mere “warm-up test”.<fnref n="41" /> Unsurprisingly, the focus of these panels has been particularly on determining the extent of the measure’s contribution to the objective pursued, as that is really key in determining whether there exist reasonably available alternatives.<fnref n="42" />

Subsequent WTO panels appear to have undertaken both “weighing” and “balancing”, but the latter was, at least initially, performed rather tentatively. In *China—Audiovisual Products* (2009), on the basis of an examination of each relevant factors separately, the Panel carried out several brief balancing of the various provisions under review, finding some provisionally necessary, while several ones unnecessary.<fnref n="43" /> Each individual balancing amounted to one paragraph where the Panel restated its overall findings with regard to each relevant factor and then reached a conclusion on whether or not the measure was (provisionally) necessary. The key factor that influenced the Panel’s different outcomes revolved around whether or not the respondent had been able to demonstrate that the specific requirement at issue “makes a material contribution to the protection of public morals”. While the other two factors remained constant across the various requirements (i.e., the protection of public morals is a “highly important governmental interest” and the measures appear to restrict to some extent trade), the Panel was not persuaded that certain requirements either made “an independent contribution”<fnref n="44" /> or “a material contribution” to the protection of public morals.<fnref n="45" />

In *EC—Seal Products* (2013), the Panel’s balancing is even more tentative. Citing the Appellate Body Report in *Brazil—Retreaded Tyres*, the Panel first acknowledged that “when a measure produces restrictive effects on international trade as severe as those resulting from an import ban, it would be difficult for a panel to find that measure necessary unless it is satisfied that the measure is apt to make a material contribution to the achievement of its objective.” While it found that the EU import ban did make a material contribution,<fnref n="46" /> the Panel also noted that, in light of the various exceptions to the import ban (for example linked to indigenous communities hunts), the EU Seal Regime, as a whole, only “contributed to a certain extent to its objective”.<fnref n="47" /> Nevertheless, the Panel concluded, without any further elaboration, that “the EU Seal Regime can be provisionally deemed ‘necessary’,” (subject to a subsequent determination of whether the EU could have adopted a *GATT*—consistent or less trade restrictive measure as an alternative to the EU Seal Regime).<fnref n="48" />

Such “balancing” is tentative as the comparison between the various factors is at best only implicit. For example, in *EC—Seal Products*, one can only assume that the Panel concluded that the measure was provisionally necessary on the basis of contrasting, on one hand, the regime’s severe impact on trade with both the “high importance” of protecting EU moral concerns (with regard to the protection of seals) and the regime’s contribution to such protection, on the other.<fnref n="49" />

These panels’ unwillingness to openly acknowledge carrying out such balancing is interesting as the Appellate Body has made express reference to such balancing. For example, in *China—Audiovisual Products*, the Appellate Body expressly envisaged this type of analysis contrasting the various relevant factors: “if a Member chooses to adopt a very restrictive measure, it will have to ensure that the measure is carefully designed so that the other elements to be taken into account in weighing and balancing the factors relevant to an assessment of the ‘necessity’ of the measure will ‘outweigh’ such restrictive effect.”<fnref n="50" />

More recent panel reports appear, however, to have been more willing to acknowledge actually carrying out the balancing of the relevant factors. For example, having identified the usual three factors, the Panel in *Indonesia—Raw Materials* proceeded with “weighing and balancing” these factors in order to determine whether the measure could be justified as necessary. The Panel stated as follows:

> The Panel has found above that the protection of the environment is a value of high importance for Indonesia. The European Union does not dispute this but argues that the furtherance of this objective of the challenged measures is minimal and outweighed by their trade restrictiveness.
> The Panel has also found that the export ban is the most trade-restrictive measure that could be applied and that the DPR is highly trade restrictive. The Panel also concluded that neither measure is apt to make a material contribution to securing compliance with Article 96(c) of Law No. 4/2009 within the meaning of subparagraph (d) of Article XX of the GATT 1994.
> Based on the above considerations, the Panel concludes that these factors *weigh against* a finding of necessity despite the importance of the value pursued by Article 96(c). [emphasis added]<fnref n="51" />

It is thus clear that, in the view of the Panel in *Indonesia—Raw Materials*, notwithstanding the importance of the value being pursued, the high level of trade restrictiveness *outweighed* the lack of “material contribution” to achieving the policy objective. While this conclusion appears to conflict with the conclusion reached by the Panel in *EC—Seal Products* (where the Panel found that the high level of trade restrictiveness did *not* outweigh the apparently less-than-material contribution to the protection of public morals and thus the measure was provisionally “necessary”), it mirrors some of the findings reached by the Panel in *China—Audiovisual Products* examined above where, in a similar scenario (high level of trade restrictiveness and no material contribution), the Panel found that the measure was *not* “necessary”.<fnref n="52" />

<footnote n="36">Appellate Body Report, *Colombia—Textiles*, *supra* note 33 at para 5.70.</footnote>

<footnote n="37">We omit here an analysis of the “less trade restrictive alternative” test as there seems to be less controversy with regard to the nature of that test.</footnote>

<footnote n="38">Panel Report, *Dominican Republic—Import and Sale of Cigarettes*, *supra* note 24.</footnote>

<footnote n="39">Panel Report, *Brazil—Retreaded Tyres*, *supra* note 22.</footnote>

<footnote n="40">*Colombia—Indicative Prices and Restrictions on Ports of Entry* (2009), WTO Doc WT/DS366/R (Panel Report) [Panel Report, *Colombia—Ports of Entry*]</footnote>

<footnote n="41">Filippo Fontanelli, “Necessity Killed the GATT — Art XX GATT and the Misleading Rhetoric about ‘Weighing and Balancing’” (2012/13) 5 European Journal of Legal Studies 36, at 48—49 referring in particular to *Dominican Republic—Cigarettes*. See also Gisele Kapterian, “A Critique of the WTO Jurisprudence on ‘Necessity’” (2010) 59 International and Comparative Law Quarterly 89 at 108—09 noting that the *Korea—Beef* decision “did not clarify how the elements of the balancing test would interact.”</footnote>

<footnote n="42">For example, the Panel in *Brazil—Retreaded Tyres* used barely two pages for its analysis of the “importance of the interests protected by the measure” and the “impact of the measure on international trade”, while it took more than 10 to examine the “contribution of the measure to the end pursued”. Similarly, the Panel’s summary of the arguments of the parties dedicated two pages each for the parties’ arguments in connection with the “importance of the interests protected by the measure” and the “impact of the measure on international trade”, while it took 27 pages to summarize their arguments with regard to the “contribution of the measure to the end pursued”. Panel Report, *Brazil— Retreaded Tyres*, *supra* note 22, Table of Contents, pages i—ii.</footnote>

<footnote n="43">*China—Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products* (2009), WTO Doc WT/DS363/R (Panel Report) at paras 7.828, 7.836 (necessary), 7.848, 7.849, 7.863, 7.868 (unnecessary) [Panel Report, *China—Audiovisual Products*].</footnote>

<footnote n="44">*Ibid* at para 7.848.</footnote>

<footnote n="45">*Ibid* at para 7.863 (“Based on the above examination of the relevant factors, we can now come to a conclusion whether, overall, the requirement that publication import entities must be wholly state-owned enterprises is ‘necessary’ within the meaning of Article XX(a). In weighing and balancing the relevant factors, we note, first of all, that the protection of public morals is a highly important governmental interest and that China has adopted a high level of protection of public morals within its territory. That said, as explained above, we have not been persuaded that the requirement in question makes a material contribution to the protection of public morals. Also, while it is unclear from the evidence on the record to what extent, if any, the requirement in question limits imports of relevant products, it is clear that it completely excludes particular types of enterprise in China from the right to engage in importing. Weighing these factors, we reach the conclusion that China has not demonstrated that the requirement in question is ‘necessary’ to protect public morals in China.”).</footnote>

<footnote n="46">*European Communities—Measures Prohibiting the Importation and Marketing of Seal Products* (2013), WTO Doc WT/DS400/R (Panel Report) at para 7.637 [Panel Report, *EC—Seal Products*].</footnote>

<footnote n="47">*Ibid* at para 7.638.</footnote>

<footnote n="48">*Ibid* at para 7.639. See also Panel Report, *Colombia—Textiles*, *supra* note 35 at para 7.445, carrying out both weighing and balancing, and concluding that respondent had failed to show that the measure at issue was a measure “necessary” to combat money laundering pursuant to Article XX(a). The brief “balancing” is contained in the following paragraph: “Assuming, for the sake of argument, that the compound tariff was intended to combat money laundering, this Panel concludes that, even though Colombia has demonstrated that the objective of combating money laundering in Colombia serves social interests that could be described as vital and important at the highest degree, Colombia has not demonstrated the contribution of the compound tariff to the alleged objective of combating money laundering. For this reason, and taking into account the restriction on international trade caused by the compound tariff, Colombia has failed to show that the compound tariff is a measure necessary to combat money laundering.”</footnote>

<footnote n="49">Interestingly, the Appellate Body in *Brazil—Retreaded Tyres* suggests (in our view incorrectly) that the Panel had actually carried out such balancing, although it does not refer to any specific paragraph of the Panel report: “It appears from the Panel’s reasoning that it considered that, in the light of the importance of the interests protected by the objective of the Import Ban, the contribution of the Import Ban to the achievement of its objective *outweighs* its trade restrictiveness. This finding of the Panel does not appear erroneous to us.” *Brazil—Measures Affecting Imports of Retreaded Tyres* (2007), WTO Doc WT/DS332/AB/R (Appellate Body Report) at para 179 [Appellate Body, *Brazil—Retreaded Tyres*] [emphasis added]</footnote>

<footnote n="50">*China—Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products* (2009), WTO Doc WT/DS363/AB/R at para 310 [Appellate Body Report, *China—Audiovisual Products*].</footnote>

<footnote n="51">Panel Report, *Indonesia—Raw Materials*, *supra* note 35 at paras 7.306—308.</footnote>

<footnote n="52">See also Panel Report, *Indonesia—Chicken*, *supra* note 35 at para 7.227, where the Panel, referring to the Appellate Body Report in *Brazil—Retreaded Tyres*, recognised that the measure at issue operated as a “trade restriction to the highest degree”, but that a material contribution made by the measure could “still outweigh that trade restrictiveness.” See also *ibid* at para 7.254 (“whether the contribution is substantial/material or not, in turn matters given the trade restrictiveness of the intended use requirement which weighs heavily against considering the measure necessary.”).</footnote>
# —

As noted, the Appellate Body’s reference to “weighing and balancing” in *Korea—Beef*as part of a “necessity” test is inherently ambiguous. Linguistically, the phrase appears to imply a strict proportionality test (i.e. a cost-benefit analysis), in which the relative importance of different values (contribution to the legitimate objective and harm to trade interests) are “weighed and balanced”. But such a reading is inconsistent with the Appellate Body’s statements in the very same report to the effect that it is up to a WTO Member to set its level of protection. That, to the contrary, implies that there are no costs that can outweigh the WTO Member’s decision to protect certain values.

The review carried out in this contribution of the WTO Panel and the Appellate Body reports decided after *Korea—Beef*shows that, rather than abandoning the concept, panels and the Appellate Body have made it a standard part of a “necessity” test. But what have they done with it?

First, no panel has ever considered a WTO Member’s chosen level of protection to be anything other than “important” (in some cases, “vital”). Second, in some cases where panels have asserted that balancing is taking place, the decisive finding has been that the measure makes an insufficient contribution to the legitimate objective at issue. That is enough for a finding that the measure is not necessary, quite aside from any “weighing and balancing”.<fnref n="53" /> For example, in *Colombia—Textiles*, the Appellate Body confirmed the Panel’s finding that the respondent had failed to show that the compound tariff is a measure necessary to combat money laundering, as Colombia “had not demonstrated with sufficient clarity the degree of contribution” made by the measure to the objective.<fnref n="54" />

But there is an important nuance, and one that should give pause to those who (following Regan) are tempted to write off the “weighing and balancing” test as mere window dressing. As the survey conducted in this contribution has shown, there is some evidence that, for measures that are highly trade restrictive, the degree of contribution that these measures are required to make to their objectives might be higher than in cases where measures are not very trade restrictive.<fnref n="55" /> If so, this would approximate a classical strict proportionality test. However, to date this form of balancing has only happened in cases where the degree of trade restrictiveness is high. For this hypothesis to be properly tested, one would need to look at cases in which the trade restrictiveness of a measure is comparably low, and see whether the degree of contribution required in such cases is lower. Given that WTO Members have an incentive only to challenge measures that are highly trade restrictive, it will take an anomalous case for such a test to be able to be performed.

<footnote n="53">This is the scenario when there would be no need to carry out a search for a less restrictive alternative, as noted by the Appellate Body in *EC—Seal Products*, *supra* note 34 at para 5.215, n 1299.</footnote>

<footnote n="54">Appellate Body Report, *Colombia—Textiles*, *supra* note 33 at paras 5.114 (and 5.149); the Appellate Body reached the same conclusion with regard to the measure’s trade restrictiveness (para 5.113). Similarly, in *Colombia—Ports of Entry*, the Panel found that the respondent had failed to provide evidence that the ports of entry measure had enhanced enforcement related to problems of under-invoicing and contraband, and thus concluded that respondent had failed to demonstrate that the measure at issue “has contributed in the past or currently to combating customs fraud and contraband in Colombia” and thus that the measure is necessary to secure compliance with Colombian customs laws and regulation pursuant to Article XX(d) *GATT*. Panel Report, *Colombia—Ports of Entry*, *supra* note 40 at paras 7.588, 7.618—619.</footnote>

<footnote n="55">See above discussion of *China—Audiovisual Products* and *Indonesia—Raw Materials*.</footnote>