First USMCA dispute panel report tackles dairy sector

Headline CANADA/US: USMCA dispute report tackles dairy sector

A Moral Stretch? US–Tariff Measures and the Public Morals Exception in WTO Law

The ‘public morals’ exception remains a key aspect of the international trade system; however, its outer bounds have never been precisely defined. This question became pertinent in the US–Tariff Measures panel report, which expansively read the exception to justify a wide range of economic interests, including prohibitions on economic espionage, anti-competitive behaviour, and the regulation of government takings. This note challenges the panel's interpretation, arguing that it is flawed and essentially amounts to a factual standard of review. It proposes an alternative approach to public morals review, which involves an objective standard of review of facts and law, while providing adequate deference to Members’ own factual determinations. It further engages with the issue of extraterritoriality, defending an approach based on Members’ legislative jurisdiction as this strikes a balance between Members’ right to regulate trade for moral purposes and the interests of the international community.