## Facts

- The United States restricted imports of shrimp and shrimp products harvested without sea-turtle protective measures under a domestic conservation program.
- In earlier proceedings, the import restriction was found inconsistent with GATT Article XI and not justified under GATT Article XX because its application constituted chapeau-prohibited discrimination.
- After the compliance period, the United States revised its implementation, including updated certification procedures for exporting countries and “Revised Guidelines.”
- The revisions allowed recognition of foreign conservation programs that were “comparable in effectiveness,” rather than requiring essentially identical methods, and were accompanied by renewed diplomatic and cooperative conservation efforts.
- Malaysia initiated compliance review proceedings under DSU Article 21.5, alleging the revised regime still violated the chapeau of GATT Article XX and that the compliance panel exceeded its mandate.
- The compliance panel found the revised measure, as applied, satisfied the chapeau and was justified under GATT Article XX; Malaysia appealed.

## Issues

1. Whether the compliance panel acted within its DSU Article 21.5 terms of reference when evaluating the revised U.S. measure and its application.
2. Whether the revised import restriction, as applied, resulted in “arbitrary or unjustifiable discrimination between countries where the same conditions prevail” under the chapeau of GATT Article XX.
3. Whether the revised regime operated as a “disguised restriction on international trade” under the chapeau of GATT Article XX.
4. What showing of flexibility, even-handedness, and good-faith international cooperation is relevant to assessing chapeau compliance for an environmental trade restriction.

## Decision

- The Appellate Body upheld the compliance panel’s ultimate conclusion that the revised U.S. measure, as applied, satisfied the chapeau of GATT Article XX and was therefore justified under Article XX.
- The Appellate Body rejected Malaysia’s principal claims that the panel exceeded its DSU Article 21.5 mandate.
- The Appellate Body agreed that the revised Guidelines introduced sufficient flexibility (including acceptance of “comparable in effectiveness” programs) and reduced the rigidity that previously produced unjustifiable discrimination.
- The Appellate Body accepted that the United States had made genuine, good-faith efforts at international cooperation on sea turtle conservation, addressing a defect identified in the earlier ruling.
- The Appellate Body agreed that the revised certification procedures, transparency, and review opportunities supported a finding that the measure was not a disguised restriction on trade.

## Legal Principles

- DSU Article 21.5 review addresses disputes about the existence and WTO-consistency of measures taken to comply, including examination of the nature and extent of changes and how the revised measure operates in practice.
- The chapeau of GATT Article XX functions to prevent abuse of Article XX exceptions by prohibiting applications that constitute arbitrary or unjustifiable discrimination or a disguised restriction on international trade.
- An environmental import restriction with extraterritorial effects may be justified under GATT Article XX if it is applied with sufficient flexibility to account for differing conditions in exporting countries and does not require a single, fixed regulatory method.
- Evidence of serious, good-faith efforts at international cooperation may be relevant to whether a measure is applied in a manner consistent with the chapeau.
- Even-handed administration, including transparent criteria and meaningful review or reconsideration of determinations affecting market access, supports chapeau compliance.

## Conclusion

The Appellate Body affirmed that the United States brought its shrimp import restriction into compliance by changing both the design and application of its regime—adding flexible, comparable-effectiveness pathways, improving procedural fairness, and pursuing good-faith international cooperation—so that the measure no longer operated as chapeau-prohibited discrimination or a disguised restriction on trade.


United States—Import Prohibition of Certain Shrimp and Shrimp Products, Recourse to Article 21.5 by Malaysia, WT/DS58/AB/RW (WTO App. Body 2001)