I continue to be frustrated and perplexed by an approach to GATT Article III and XX that considers different aspects of a measure in different parts of the legal analysis. In that regard, here are some excerpts from the Seal Products AB report:
5.95. We note that, in these disputes, the Panel concluded that the measure at issue, although origin-neutral on its face, is de facto inconsistent with Article I:1. The Panel found that, while virtually all Greenlandic seal products are likely to qualify under the IC exception for access to the EU market, the vast majority of seal products from Canada and Norway do not meet the IC requirements for access to the EU market. Thus, the Panel found that, "in terms of its design, structure, and expected operation", the measure at issue detrimentally affects the conditions of competition for Canadian and Norwegian seal products as compared to seal products originating in Greenland. ...
Thus, under Article I:1, the measure at issue seems to be the "IC exception."
Article XX chapeau
5.339. For these reasons, we find that the European Union has not demonstrated that the EU Seal Regime, in particular with respect to the IC exception, is designed and applied in a manner that meets the requirements of the chapeau of Article XX of the GATT 1994.
With the chapeau as well, it's the IC exception that is at issue.
5.188. With respect to the claims under Article I:1 of the GATT 1994, the Panel found that,
"in terms of its design, structure, and expected operation, the EU Seal Regime detrimentally
affects the conditions of competition on the market [for seal products] of Canadian and Norwegian origin as compared to seal products of Greenlandic origin."1227 As we see it, the existence of the permissive component in the form of the IC exception alone cannot confer an advantage to seal products of Greenlandic origin, unless it is compared to the treatment of seal products of Canadian and Norwegian origin. It is only the combined operation of the permissive aspect of the EU Seal Regime (i.e. the IC exception, which grants market access to seal products of Greenlandic origin), together with the prohibitive aspect of the EU Seal Regime (i.e. the "ban" that restricts market access for Canadian and Norwegian seal products), that leads to a finding of de facto discrimination under Article I:1.
5.193. At the same time, we do not consider that the Panel was correct to the extent that it
suggested that what it considered must be "justified" in this case was limited to the permissive aspects flowing from the IC and MRM exceptions.1235 Rather, what must be justified is, as we have said, both the prohibitive and permissive components of the EU Seal Regime, taken together. ...
In contrast to Article I:1 and the chapeau, then, under Article XX(a) the examination was of the measure as a whole, not just the IC (or MRM) exception.
This approach seems very odd to me. If one part of the measure is discriminatory, and violates the rules (including the chapeau), what difference does it make if the broader measure meets one of the Article XX objectives? There is no claim that the broader measure violates Article III:4, so why consider whether that broader measure falls under an exception?
In the conext of the chapeau, the AB said:
5.306. One of the most important factors in the assessment of arbitrary or unjustifiable
discrimination is the question of whether the discrimination can be reconciled with, or is rationally related to, the policy objective with respect to which the measure has been provisionally justified under one of the subparagraphs of Article XX. ...
If ultimately you are going to look at the relationship of the discrimination to the policy objective under the chapeau, why bother with first looking at the relationship of the measure and the policy objective under the sub-paragraphs?