In the course of writing a paper recently, I developed an idea that I would like to test in the epistemic community. It is to do with the definitions of internal measures under Article III:4 and enforcement measures under the Note Ad Art III. Fundamental points, of course, and the idea might not be persuasive. But I'd be interested in an open discussion (if any) and a blog seems like a good way to do this.
Article III:4 GATT is a non-discrimination provision guaranteeing that imported products are accorded no less favourable treatment than ‘like’ domestic products. It applies to measures ‘affecting the internal sale, offering for sale, purchase, transportation, distribution or use’. It has long been understood that the word ‘affecting’ means that Article III:4 applies to measures affecting conditions of competition for imported products in the marketplace. However, this cannot mean that Article III:4 applies to all measures with this effect: if it did, it would also govern quantitative restrictions. There must be another way to distinguish measures that are internal from those that are not.
I would propose that the correct test for determining this question is to ask whether a measure regulates (or most directly affects) an act involving products once they have been imported. This is for several reasons. First, it respects the wording of Article III:4, which refers to measures affecting internal acts. Second, it parallels the Appellate Body’s test for taxes and charges, which are subject to Article III:2 only when they ‘accrue’ on the basis of an internal condition or event. Third, it explains the jurisprudence on the point.
There are two Appellate Body Reports of importance. In the first, EC – Bananas III, the Appellate Body decided that a measure allocating import licences to domestic distributors is to be assessed under Article III:4. The Appellate Body said that this was because the rules were intended to have an effect on the sales of competing domestic products. But this is not convincing. As already noted, the same can be said of any quantitative restriction. The better explanation is that the measure directly regulated an act (distribution) that was only relevant to imported products. The second, US – FSC (Article 21.5 – EC) involved a tax rebate contingent on the use (ie purchase) of domestic products. The Appellate Body decided that this was an internal measure because it affected ‘the “internal ... use” of imported products, within the meaning of Article III:4 of the GATT 1994, as compared with like domestic products.’ For the reasons given, it is suggested that the first part of this sentence is correct; the second - for these characterisation purposes - of secondary importance.
Enforcement measures under the Note Ad Article III
Article III:4 also has an extended application to certain non-internal measures, by virtue of the Note Ad Article III. This Note states, relevantly, that a measure that is enforced at the time of importation is still to be treated as an internal measure. It permits WTO Members to employ border measures, which need not have any formal correlation to the internal measure being enforced, where this can be justified on the grounds of administrative efficiency as part of a domestic regulatory scheme.
Sometimes the Note Ad Article III is overlooked. This occurred, for example, in the Panel Report in China – Auto Parts, which, relevantly, involved administrative requirements imposed at the border on imported products, with a view to enforcing an internal charge. Citing EC – Bananas III and US – FSC (Article 21.5 – EC), the Panel considered these measures to be internal measures because they affected the conditions of competition of the relevant products once they had been imported. For the reasons suggested here, it is suggested that the result was correct, but the reasoning flawed. The measures were internal measures, but because they enforced an internal charge. This issue was not appealed, and the Appellate Body seems to have thought that the Panel’s approach was appropriate.
PPMs, Tuna and Shrimp
This interpretation should also be tested against the Tuna and Shrimp disputes. US – Tuna (Mexico), DS21, unadopted, circulated 3 September 1991, concerned a measure prohibiting, inter alia, the harvesting of tuna by persons and vessels subject to US jurisdiction in a manner that harmed dolphins; it also prohibited the importation of commercial fish and fish products harvested in the same manner (see para 2.4). The GATT Panel held that Article III:4 did not apply because the measure did not affect tuna ‘as such’ (paras 5.1 and 5.14). This is generally, and correctly, considered to have been incorrect for ignoring the longstanding jurisprudence according to which Article III:4 applies to measures affecting conditions of competition in the domestic marketplace, which also covers indirect measures: eg Howse and Regan,  at 255.
However, the result may have been correct, for the reasons suggested here. The first measure would be seen as an internal act, namely, production by persons within US jurisdiction. It therefore falls within Article III:4. The ban on importation does not. It affects acts that are not internal. The question is whether it can be justified as a measure enforcing the internal measure (see infra). Most likely, it does not. A mere parallelism between the enforcement and internal measure is insufficient. There has to be some causal link. It is doubtful that a generic import ban is necessary to enforce a ban on fishing practices by persons within US jurisdiction. It might be partly necessary insofar as it applies to those persons. But this does not make it wholly necessary insofar as it applies to other persons. This could well also explain why the US conceded that the measure in US – Shrimp, WT/DS58 which was similar, fell under Article XI:1.
A prohibition on the sale of products produced in a particular way would, however, fall under Article III:4, because it is focused on an internal act; and an import ban would be a valid enforcement of this measure. (Although there is an interesting question concerning measures that are focused both on sales and on production. It is not certain that the former excludes the latter.)
 GATT Panel Report, Italian Agricultural Machinery, L/833, adopted 23 October 1958.
 Robert Howse and Don Regan, ‘The Product/Process Distinction – An Illusory Basis for Disciplining ‘Unilateralism’ in Trade Policy’ (2000) 11 EJIL 249, 254-5, argue that all process-based measures fall under Article III:4 because they affect the sale of products – the view rejected here. They dismiss a reading of Article III:4 that focuses on the acts specifically mentioned in this provision, on the grounds that this would exclude regulations affecting internal acts not listed there, such as possession, storage, advertising, and so on. The interpretation suggested here would cover measures affecting these acts.
 WTO Appellate Body Report, China – Auto Parts, WT/DS339/AB/R, adopted 12 January 2009, paras 161-162.
 WTO Appellate Body Report, EC – Bananas III, WT/DS27/AB/R, adopted 25 September 1997, para 211.
 WTO Appellate Body Report, US – FSC (Article 21.5 – EC), WT/DS108/AB/RW, adopted 29 January 2002, para 213.
 This is different from the rationale for Article III:2(a), which permits charges to be levied at the border if they are ‘equivalent’ to non-discriminatory internal taxes.
 WTO Panel Report, EC – Asbestos, WT/DS135/R, adopted as modified by the Appellate Body Report on 5 April 2001, paras 8.94-8.95.
 WTO Panel, China – Auto Parts, WT/DS339/R, adopted as modified by the Appellate Body Report, 12 January 2009, para 7.249-7.258
 There is no reason to believe that an internal charge cannot be enforced, as well as collected, at the border. In this respect, China’s counter-argument was also misguided: it said that ‘what matters is whether the aspect of the measures under scrutiny is an element of administrating a valid border measure, which is therefore within the scope of Article II, or whether this aspect of the measure serves instead to affect the internal sale, distribution or use of the product’: ibid, at para 7.254. What mattered was whether the aspect of the measure was enforcing an internal measure.
 WTO Appellate Body, China – Auto Parts, above at n 45, para 196.