Arguments presented by third parties

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United states

Introduction
Factual Aspects
Legal Aspects

The General Agreement on Tariffs and Trade

Article XI of the GATT
1. With respect to Canada's argument that the Decree violates Art. XI:1 because it imposes an absolute prohibition or restriction on imports, the United States agrees with the EC that Article XI is simply not relevant to these proceedings, and the Decree should be analyzed under Article III instead. The Decree regulates characteristics of asbestos and asbestos-containing products. It applies to all asbestos, and is applied to imported products "at the time or point of importation," in the words of the Note Ad Article III.
Article III of the GATT
1. With respect to Canada's allegation that the Decree violates the national treatment obligations embodied in GATT Article III:4, the United States argues that, to show a violation of Article III, there must be discrimination - that is, unlike treatment of like products. Yet the relevant domestic and imported products here are not "like products" for the purposes of Article III:4. As the EC has noted, the classic statement of the factors relevant in determining what constitutes a "like product" is found in the Working Party report on Border Tax Adjustments of 1968, which defined like products in terms of "the product's end-uses in a given market; consumers' tastes and habits, which change from country to country; the product's properties, nature and quality".^¹²² The United States generally agrees with the EC's analysis that the properties, nature and quality of asbestos and asbestos-containing products on the one hand, and substitutes on the other, are not "like". The substitutes are by definition substitutable for asbestos and asbestos-containing products for certain uses, but that does not mean that they are "like products".
2. According to the United States, Canada has not made the correct product comparison for the purpose of determining whether the relevant products are "like products" under Article III:4. In considering a regulation that bans asbestos and requires the use of substitutes, the relevant products to compare are the following: (i) asbestos must be compared to substitute fibres; and (ii) products containing asbestos must be compared to products that do not contain asbestos but which perform the same function. Where the asbestos elements of a product were inessential, the substitute product may consist of the same product minus the asbestos element (e.g., a kitchen hot pad with thick cotton padding but no asbestos); or the same product redesigned to eliminate the need for asbestos; or a similar product which uses different fibres (e.g., a hot pad made of glass fibre); or a similar product made of what the EC describes as "classic materials" (e.g., a trivet made of cast iron, ceramic or plastic). The physical correspondence between the two classes of products is therefore considerably weaker than Canada has assumed. Canada has failed to show that asbestos and asbestos-containing products and the substitutes have the same "properties, nature and quality". The known severe adverse human health effects of asbestos are another reason why asbestos-containing products are not "like" the substitutes for which adverse health effects have not been demonstrated. The substitute fibres differ considerably in physical structure and properties from chrysotile asbestos and thus cannot be considered "like products." For example, while chrysotile is a naturally occurring mineral which is crystalline in nature, the man‑made mineral fibres (MMMF) are amorphous (non‑crystalline) silicates which are produced from a liquid melt of different starting materials (e.g., slag, natural rock, glass, clays). Furthermore, unlike chrysotile asbestos, MMMF do not split longitudinally into smaller fibrils of smaller diameter, but may break transversely into shorter segments.^¹²³
Article XXIII:1(b) of the GATT
1. The United States argues that Canada has failed to meet the special burden imposed by Article 26.1 of the Dispute Settlement Understanding on parties making claims of non-violation nullification or impairment. The United States has been one of the strongest proponents of the non-violation remedy, as an essential safeguard for bargained-for market access rights against frustration by government actions. But the requirements of the non-violation remedy are not satisfied here. As the EC have noted, the text of Article XXIII:1(b) establishes three elements that a complaining party must demonstrate in order to make a cognisable claim under Article XXIII:1(b): (i) application of a measure by a WTO Member; (ii) a benefit accruing under the relevant agreement; and (iii) nullification or impairment of the benefit as a result of the application of the measure. Canada, as the complaining party, has the burden of presenting detailed evidence in support of all three elements. In the present case, there is no dispute that the French Decree is a measure of a Member. The question is simply whether Canada has a legitimate expectation of benefits accruing to it. The precedents are clear that for expectations to be legitimate, they must take into account all measures of the party making the concession that could reasonably have been anticipated at the time of the concession.
2. The United States considers that, as a matter of principle, the Panel should reject the possibility of a finding of non-violation nullification or impairment with respect to health and safety regulations that respond to the development of scientific knowledge concerning health risks. Members do not have a legitimate expectation that regulatory measures will stay static in the face of expanding scientific knowledge concerning health risks, and changing societal decisions concerning the level of acceptable risk. Canada is also in a poor position to argue that an asbestos ban was unforeseeable at the time it negotiated the tariff concessions on asbestos. The dangers posed to human health by asbestos are notorious and have been so for many years. Pliny, the ancient Roman author, described the "diseases of slaves" as including exposure to the textile processes of preparing and weaving asbestos, and even referred to the use of a transparent bladder skin as a respirator to avoid inhalation of dusts by slaves.^¹²⁴ As of the time of the first GATT negotiating round in 1947, asbestosis had already (in the 1920s) been identified as a distinct condition caused by asbestos.^¹²⁵ By 1935 asbestosis was widely recognized as a mortal threat affecting a large fraction of those who regularly worked with the material.^¹²⁶ In addition, by the mid-1940s there were indications that exposure to asbestos in animals and humans was associated with lung tumours.^¹²⁷ Thus Canada should have reasonably expected subsequent regulatory action (such as a ban) by a GATT contracting party as a result. As of the Dillon Round of 1960-61, Canada had even more reason to foresee the possibility of restrictive regulations of asbestos. An international symposium of experts on the pathogenesis of lung cancer in 1953 published its conclusions and recommendations in a journal which editorialised: "[I]t seems to be beyond discussion that cancer of the lung is sometimes caused by occupational exposure to asbestos."^¹²⁸ In addition, two major studies had been published in 1955 on cancer in the textile industry demonstrating the relationship between asbestosis and lung cancer.^¹²⁹ Since the early 1960s, the hazards posed by asbestos - and particularly chrysotile asbestos - have become even more widely known and documented.^¹³⁰

The Agreement on Technical Barriers to Trade

Article 2.1 of the TBT Agreement

The United States argues that, for the reasons discussed in relation to Article III of the GATT, these products are not "like products." Furthermore, since the ban is applied without discrimination as to the source of the product, discrimination between foreign sources is not an issue.

Article 2.2 of the TBT Agreement
1. The United States notes that Article 2.2 provides a key element of the disciplines in the TBT Agreement. From the standpoint of the United States, certain aspects of Article 2.2 are particularly important with respect to health and safety regulation. The first sentence of Article 2.2 is important because it recognizes that in certain circumstances, technical regulations may create necessary obstacles to trade, and the creation of such necessary obstacles is consistent with the TBT Agreement. We note that the "legitimate objectives" enumerated (non-exhaustively) in Article 2.2 specifically include protection of human health or safety. Article 2.2 also recognizes that in assessing the risks that may arise from non-fulfilment of a legitimate objective, a government may consider a number of elements, including available scientific and technical information, related processing technology or the intended end-uses of a product.
2. The obligation in Article 2.2 that technical regulations are not to be more trade restrictive than necessary to fulfill a legitimate objective should be interpreted in a manner similar to Article 5.6 of the Agreement on Sanitary and Phytosanitary Measures (SPS).^¹³¹ Such a reading is supported by the sixth clause of the Preamble to the TBT Agreement, which provides that: "[R]ecognizing that no country should be prevented from taking measures necessary … for the protection of human, animal or plant life or health, [or] of the environment […] at the levels it considers appropriate […]." The United States argues that the preamble is part of the context of Article 2.2 in the sense of Article 31 of the Vienna Convention on the Law of Treaties, and provides an authoritative indication of the TBT Agreement's object and purpose for the purposes of treaty interpretation. Thus, in order for a Member to show that a government's technical regulation is more trade-restrictive than required, it would need to show that there is another measure that is reasonably available, fulfils the regulating Member's legitimate objectives, and is significantly less restrictive to trade. Accordingly, the complaining party should be required to identify a specific alternative measure that is reasonably available - as a Member is not required to do what is unreasonable. Furthermore, the alternative measure must make a significant difference from a trade perspective. There should be no need to adopt an alternative measure if it makes only an insignificant difference in terms of trade. Most importantly, the complaining party must demonstrate that the alternative measure fulfils the government's objectives. Canada has failed to demonstrate that its preferred alternative to the French ban – i.e. "controlled use" of asbestos and asbestos products – fulfils the French Government's stated "legitimate objective" of protection of human health.
3. Canada alleged that the Decree does not address the "true problem" of asbestos in France which Canada identifies as the flocking of asbestos. Yet it is not for Canada to determine what France's "true problem" is. It is up to France to determine what level of protection to afford its citizens. Second, Canada alleges that the French Decree violates Article 2.2 because it fails to acknowledge the "scientific reality" that chrysotile encapsulated in a matrix is harmless. Yet as discussed above and as demonstrated by the EC, encapsulated asbestos is not harmless at all, as the encapsulation can easily be breached, and is likely to be breached during the product's life cycle, resulting in release of fibres and elevated risk to human health. Canada alleges that the French Decree violates Article 2.2 because it replaces use of chrysotile – an allegedly harmless product – with substitutes whose health risks are unknown. The United States fundamentally objects to this reading of the TBT Agreement. Canada is implicitly arguing that any regulatory action negatively affecting trade in a product has to be tested against the hypothetical risks engendered by use of likely alternative products. This test has no basis whatsoever in the TBT Agreement.
Article 2.4 of the TBT Agreement
1. Canada has asserted that Article 2.4 requires a panel to determine: (i) whether a technical regulation on chrysotile is required; (ii) whether there are international standards concerning chrysotile, (iii) whether the international standards are effective and appropriate to achieve the objective; and (iv) whether the Decree is based on international standards. Under this analysis, Canada concludes that France adopted the most restrictive measure possible despite the fact that the international community has developed standards representing a less restrictive approach (i.e., controlled use). This analysis misreads Article 2.4. First and fundamentally, Article 2.4 does not contemplate that a panel determine whether a technical regulation is or is not required. The burden of proof is on Canada to demonstrate that international standards exist and are relevant. In regard to the ILO standard, both the ILO Convention 162 and Recommendation 172 allow participating countries to choose the approach they find to be appropriate to protect workers from asbestos hazards. Indeed, the Provisional Record to the 72^nd Session of the International Labour Conference, which adopted Convention 162, states concerning Article 10 of Convention 162 (which Canada now claims to condition a ban on a finding concerning the risk posed by product substitutes): "The Government member of Canada saw nothing in Article 10 that would prevent any country from doing whatever it wanted with respect to asbestos." ^¹³²
2. The United States argues that Brazil's interpretation of Article 2.4 of the TBT Agreement ignores the fact that climate, geography and fundamental technological problems are listed as examples, not an exhaustive list, of reasons that an international standard may be an "ineffective and inappropriate means" of achieving a Member's legitimate objective.

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Arguments presented by third parties

United states

Introduction

Factual Aspects

Legal Aspects

The General Agreement on Tariffs and Trade

Article XI of the GATT

Article III of the GATT

Article XXIII:1(b) of the GATT

The Agreement on Technical Barriers to Trade

Article 2.1 of the TBT Agreement

Article 2.2 of the TBT Agreement

Article 2.4 of the TBT Agreement