FACT OF THE CASE

French “government passed a Decree of 24 December 1996, with respect to the prohibition of
asbestos and products containing asbestos, including a ban on imports of such goods. The
French decree prohibits ‘the manufacture, processing, sale, import, placing on the domestic
market and transfer under any title whatsoever of all varieties of asbestos fibres irrespective
of whether these substances have been incorporated into materials, products or devices.
Article 2 of the Decree sets out a temporary exception for” “certain existing materials,
products or devices containing chrysotile fibre when … no substitute for that fibre is
available” and, based on current scientific knowledge, “poses a lesser occupational health risk
than chrysotile fibre”. “Further, this exception only applies if the technical safety guarantees
required for the product’s ultimate purpose are satisfied.”

Canada “challenged the prohibition and ban not on the ground of toxicity of asbestos but
maintained that the chrysotile asbestos, the only form of the substance still allowed to be used
in France, was safe in circumstances of properly controlled use and should not be banned
outright. As one of the few remaining major producers and exporters of asbestos, Canada
alleged that the French ban severely damaged its export trade in chrysotile asbestos and was
protectionist in intent, as France itself permitted controlled use of domestically-produced
asbestos for certain purposes.”

The matter first went to the settlement body which decided in favour of France, later the
matter went in appeal to the Appellate body which upheld the decision but modified the
reasoning.

STATEMENT OF ISSUES

1. “Whether the prohibition and ban imposed by France infringed the provisions relating to
technical regulations and standards set out in article 2 of the Agreement on Technical Barriers
to Trade (‘TBT Agreement’).”

2. “Whether imported asbestos and products containing asbestos eg cement are to be

considered ‘like’ to domestic asbestos products including polyvinyl alcohol, cellulose and
glass.”
3. “Whether the decree of France violated the principle of non-discrimination found in the
national treatment provision of article III of the GATT, and was contrary to the GATT
prohibition on quantitative import restrictions.”

4. Whether the ban imposed by France fall under Exception XX (b) of the GATT.

ANALYSIS

1. “The Appellate Body analyzed that (i) the products subject to the ban were identifiable (i.e.
any products containing asbestos); (ii) the measure was a whole laid down product
characteristics; and (iii) compliance with the measure was mandatory. Hence, concluded that
the ban as an integrated whole was a technical regulation as defined in Annex 1.1 and thus
covered by the TBT Agreement. However, the Appellate Body did not complete the legal
analysis of Canada's TBT claims on the ground that the Panel did not lay down the sufficient
facts to be examined. Hence the full analysis will not be done by the Appellate body.”

2. “It was to be analyzed whether imported asbestos and products containing asbestos eg.
Cement (containing one of those alternative fibres in place of asbestos) are to be considered
‘like’ to domestic asbestos products including polyvinyl alcohol, cellulose and glass. To
establish this, the panel applied the test of ‘likeness’ derived from a 1970 GATT Working
Party Re- port on Border Tax Adjustments. That test turns on four factors designed to
evaluate the competitive relationships between and among products: the properties, nature,
and qualities of the products; end uses of the products; consumers' perceptions and behavior;
and the tariff classification of the products. There was further emphasis on the necessity of
examining all the evidence in context, including the need to scrutinize physical characteristics
as distinct from end uses. Among those physical properties, carcinogenicity, or toxicity,
constitutes ... a defining aspect of the physical properties of chrysotile asbestos fibres, by
comparison with non-asbestos alternatives. It was observed that toxic character of the product
is also relevant to the analysis of consumer preferences.”

It “was observed that there is some overlap in the end uses for asbestos and its alternatives,
but that there are also many uses for which substitution is not possible. Canada, considering
consumer tastes and preferences to be irrelevant, had provided no evidence on this question
and consequently failed to meet its burden of establishing likeness. Moreover, it was
analyzed that the tariff classifications of asbestos and its alternatives are different. The
Appellate Body performed a similar analysis for cement products containing asbestos,
concluding that both the substance itself and products containing it are not like products by
comparison with non-asbestos-containing alternatives.”

Further “Canada did not provide sufficient evidence to establish likeness and thus failed to
prove that measure was inconsistent with Article III:4.”

3. Exception “XX(b) of GATT protects measures necessary to protect human life or health.
France based on scientific evidence claimed that asbestos exposure can cause serious
illnesses including lung cancer, mesothelioma (an- other malignant illness with high mortality
rates, for which the only known cause is exposure to asbestos), and asbestosis (a non-
malignant illness with symptoms similar to emphysema). It is also carcinogenic in nature.”

Canada “presented that risk imposed by a carcinogen must be quantified. It was analysed that
the nation has broad discretion in the evaluation of scientific fact. A nation can in good faith
rely on its qualified and respected scientific sources though it may be divergent from majority
scientific opinion. Therefore France’s policy of substituting less risky alternatives for a
highly risky one is valid.”

Canada “had suggested that less burdensome measures similarly protective of public health,
but relying on controlled use of asbestos, ought to be considered in determining whether the
ban is necessary under Article XX(b). It was analyzed that such alternatives would not fully
eliminate asbestos-related risk as articulated in French public policy, the Appellate Body
concluded that controlled use is not a reasonably available alternative.”

It “was found that the measure was justified on the grounds of human health in accordance
with article XX(b) of the GATT and fulfilled the conditions set out in the chapeau (Article
XX) as the measure neither led to arbitrary or unjustifiable discrimination, nor constituted a
disguised restriction on international trade.”

CONCLUSION

After “the analysis and observations the following are the rulings in the case:”
1. French “Decree, prohibiting asbestos and asbestos-containing products had not been shown
to be inconsistent with the European Communities’ obligations under the WTO agreements.”
2. The “Appellate Body concluded that it was unable to examine Canada’s claims that the
measure was inconsistent with the TBT Agreement.”
3. Reversed the Panel’s findings with respect to “like products”, under Article III:4 of the
GATT 1994. The Appellate Body ruled that the Panel erred in excluding the “health risks
associated with asbestos from its examination of “likeness”. Also, concluded that no violation
of Article III:4 of GATT.”
4. Upheld “the Panel’s conclusion, under Article XX(b) of the GATT 1994, that the French
Decree is necessary to protect human life or health.”
The case can be applauded on these grounds:
First, “Appellate Body avoided delivering a principled ruling, instead carefully crafting its
main findings on a case-by-case basis, leaving a number of issues undecided. In my opinion
this may be the only way in which the WTO can resolve such competing values as health
protection and free trade, which cannot be contested in any simple or straightforward way.”

When “it comes to internal legitimacy, this case afforded WTO the opportunity to set some
clear limits on the ability of members to use product bans as a means of protecting the health
of their citizens. Ironically, the high scientific understanding of the hazards of asbestos use
may make it difficult to justify zero-risk-tolerance policies toward products whose hazardous
nature is less well understood. In effect, by accepting a ban on chrysotile asbestos fibre and
products containing chrysotile asbestos (products with a fairly low international trade value),
the WTO could discourage bans on other products whose hazards are not as well known as
those of asbestos.”

Lastly, “on the issue of external legitimacy, the Appellate Body has attempted to respond to
public criticism about the WTO’s intrusiveness into areas of social policy by theoretically
supporting the right of members to use bans and zero risk-tolerance toward public health
threats, while striking down such policies in practice.”