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Domestic regulatory policies such as environmental taxes, subsidies, standards, labels, voluntary agreements, and domestic emissions trading programs may conflict with WTO regime. To avoid potential conflict between domestic regulatory measures and WTO rules, it is the key to overcome the GATT exception, in that complaining states are most likely to invoke the exception under Article XX(b) or XX(g) and a complained state, on the other hand, contends that the measure is saved by exception. When it interprets the "necessary" to protect human, animal or plant life or health under the exception XX(b), WTO Panel requires a form of balancing. Also Panel emphasizes "primarily aimed at" to determine whether the measure fulfil the requirement of XX(g). Even if a measure falls within one of the exceptions under Article XX, it must also comply with the conditions of the chapeau of Article XX. Panel found that the lack of flexibility, transparency, procedural fairness could constitute not only arbitrary but also unjustifiable discrimination. In addition Panel emphasizes the negotiation factor should be considered in determining whether the measure fits chapeau. Based on above analysis, the domestic regulatory measure should be applied flexibly, with transparency and procedural fairness and preceded by good faith efforts to reach a negotiated solution.


Domestic regulatory policies such as environmental taxes, subsidies, standards, labels, voluntary agreements, and domestic emissions trading programs may conflict with WTO regime. To avoid potential conflict between domestic regulatory measures and WTO rules, it is the key to overcome the GATT exception, in that complaining states are most likely to invoke the exception under Article XX(b) or XX(g) and a complained state, on the other hand, contends that the measure is saved by exception. When it interprets the "necessary" to protect human, animal or plant life or health under the exception XX(b), WTO Panel requires a form of balancing. Also Panel emphasizes "primarily aimed at" to determine whether the measure fulfil the requirement of XX(g). Even if a measure falls within one of the exceptions under Article XX, it must also comply with the conditions of the chapeau of Article XX. Panel found that the lack of flexibility, transparency, procedural fairness could constitute not only arbitrary but also unjustifiable discrimination. In addition Panel emphasizes the negotiation factor should be considered in determining whether the measure fits chapeau. Based on above analysis, the domestic regulatory measure should be applied flexibly, with transparency and procedural fairness and preceded by good faith efforts to reach a negotiated solution.