Respondent- European Communities
GATT Articles III: 4, XX and XXXIII: 1(b)
It was a case regarding France’s ban on asbestos. The issue in this case was between imported asbestos and products containing asbestos versus certain domestic substitutes such as PVA, cellulose and glass (“PCG”) fibres and products containing such substitutes.
In this case, France prohibited the manufacture, processing, sale, and importation of asbestos fibers and products containing asbestos fibers, although it allowed the production and sale of asbestos substitutes. Therefore, the ban clearly benefited domestic producers of asbestos substitutes over their foreign asbestos-producing competitors. In the context of the discussion of “like” product, the Appellate Body said that health risks are to be considered in the Article III:4 “like product” inquiry.
In EC-Asbestos, the Appellate Body made it look as if the purpose of the regulatory measure was relevant to applying the “like product” tests, thus giving support to those who would read purpose into the analysis of Article III. However, the purpose of a measure has no role other than to help apply the competitive relationship test.
Regulatory purpose is not an independent reason for finding that products are not “like.” Instead, it is simply a fact that helps us understand the competitive relationship between imported and domestic goods. The Appellate Body integrated a consideration of health factors into two of the Border Tax Adjustments criteria: physical properties and consumers’ tastes and habits.
Thus, when determining which physical properties are relevant to the “like product” inquiry, “panels have got to inspect those physical properties of products that are probable to persuade the competitive affiliation between products in the market.
Since the Appellate Body established the Panel’s likeness scrutiny amongst asbestos and PCG fibres as well as amongst cement-based products comprising of asbestos and those having PCG fibres deficient, it rejected and reversed the Panel’s rulings that the products at question were alike and that the measure was incompatible with Article III: 4.
The Appellate Body upheld the Panel’s ruling that the ban was acceptable as an exemption under Article XX (b). The Panel also established that the steps taken fulfilled the conditions of the Article XX, i.e. chapeau, as the measure neither constituted a disguised restriction on international trade, nor led to arbitrary or unjustifiable discrimination.
The Panel after applying Article XXIII: 1(b) to the measure in question finally discarded Canada’s claim and ruled that the measure did not result in mutilation under Article XXIII: 1(b), due to Canada having rationale to expect a ban on asbestos.
 DS 135: European Communities — Measures Affecting Asbestos and Products Containing Asbestos